Mortgage Approvals Flat in April: A Sign of Hesitancy in the Market?
The latest data from the Bank of England reveals that net mortgage approvals for home purchases have remained flat in April, with 61,100 approvals recorded. This represents a 0.3% decrease compared to the previous month. While remortgaging net approvals fell by 10.7% to 29,900, mortgage borrowing jumped to £2.4 billion in April, up from £500 million in March.
UK housing market sees slight dip in mortgage approvals
The data comes as the number of UK residential transactions in April rose by 10% to 90,430 from a year ago, according to HMRC data. This marks the fourth consecutive month of increased provisional seasonally adjusted home sales.
“A slight dip in mortgage approvals reflects the hesitancy creeping back into the market.” - Emma Cox, Managing Director of Real Estate at Shawbrook
Cox attributes the dip to the uncertainty surrounding the upcoming general election and potential interest rate cuts. As a result, lenders may adjust their rates accordingly, leading to higher rates for borrowers in the short term.
Mortgage rates edge upwards, affecting borrower confidence
Mark Harris, Chief Executive of SPF Private Clients, notes that mortgage approvals for new purchases were fairly consistent with the previous month, possibly due to rising mortgage rates affecting borrower confidence. Remortgaging numbers decreased, as borrowers opted to stick with their existing lender and avoid refinancing to another lender.
The average interest rate paid on newly drawn mortgages increased slightly by 7 basis points to 4.74%, reflecting higher mortgage pricing on the back of rising swap rates. However, with inflation moving closer to its 2% target, an interest rate cut is becoming increasingly likely.
Mortgage market sees pause in upward momentum
John Phillips, Chief Executive of Spicerhaart and Just Mortgages, observes that the slight fall in net mortgages presents a pause in the upward momentum witnessed in the housing market. This could be attributed to seasonal fluctuations or buyers taking a wait-and-see approach as rising interest rates are factored into their calculations.
Despite the dip, mortgage approvals remain at healthy levels overall. However, navigating this evolving market landscape requires expert guidance. With swap rates continuing to influence mortgage product pricing, securing the most suitable and competitive rates becomes even more important.
Expert guidance crucial in navigating the mortgage market
