Mortgage debt swelled in March, according to Bank of England data, with net borrowing climbing from £4.6bn to £7bn in March as interest rates rise.
House purchase mortgage approvals slipped to 70.7k in March from 71.0k in February, slightly ahead of consensus but moving towards their 2015 to 2019 average of 66.5k – which analysts say is to be expected.
“Many lenders are now acting with a far greater degree of caution and for prospective buyers this means fewer product options at higher rates,” said Marc von Grundherr, director of London estate agents Benham and Reeves.
“This has inevitably reduced the number of buyers being approved for a mortgage, although those that have are still able to take advantage of a relatively affordable cost of borrowing.”
CEO of West End-based Octane Capital, Jonathan Samuels added that a “dip in the level of mortgages being approved was always likely to follow such a sustained period of heightened market activity.”
The UK’s housing market has been booming since the Covid-19 began, spurred by the lockdown induced race for space and the pandemic era stamp duty holiday.
However, analysts at Pantheon Macroeconomics expect the spiralling cost of living crisis to knock the housing market off its sustained steamroll.
“While housing demand potentially will be supported by the savings that households have accumulated during the pandemic, the combination of falling real disposable incomes, low consumer confidence and rising mortgage rates is too toxic for the housing market to come away unscathed,” wrote analysts in a note this morning.
Pantheon analysts expect mortgage approvals in the second half of this year to undershoot their 2015-to-19 average level slightly.
“First-time buyer interest is also strong as people seek bargains in a relatively slow market for city centre flats, with sellers made up of those seeking more space in the post-pandemic world, and landlords put off by increased regulation and higher taxes,” said founder of London-based Alture Mortgage Finance, Rob Gill.