Net mortgage borrowing increased to £6.1bn in August, up from £5.1bn in July, and remaining above its 12-month pre-pandemic average of £4.3bn, according to the latest figures from the Bank of England (BoE).
Mortgage approvals increased sharply to 74,300 in August from 63,700 in July. This is the highest level seen since January 2022 (74,500), and a notable rise following a downward trend over the previous several months.
And those lucky enough to secure a mortgage last month snuck in with an average rate of 2.55%, well below the current rates that the market is seeing.
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Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Net borrowing rose in August, as did mortgage approvals for house purchases, as borrowers took advantage of mortgage rates before they rose higher.
“The rate paid on new mortgages rose by 22 basis points to 2.55 per cent in August, up again on July’s figures. Next month’s figures will likely show a significant uptick in the average rate on new mortgages as rates continues to rise.
“Lenders have been pulling fixed-rate mortgages left, right and centre as Swap rate volatility makes them difficult to price. Some lenders are re-pricing higher while others are waiting to see what the market does before relaunching.
“It is unlikely that much will change before the next interest rate decision on 3rd November or the Government plan supported by the Office of Budget Responsibility on 23rd November. Borrowers concerned about their mortgage should seek advice from a broker to find out what options are available.’
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“These figures look very much like the calm before the potential storm, following the recent turmoil on the financial markets.
“Nevertheless, we certainly believe activity will retain its momentum for a few months at least as buyers seek to take advantage of lower mortgage rates before they climb even higher.
“Approvals are generally a better indicator of direction of travel for the market than more volatile house prices so we will be keeping an even closer watch on approvals over the next few months.”
Tomer Aboody, director of property lender MT Finance:
“What looks like a final bid from buyers to take advantage of rates before increasing has increased the number of house purchases with mortgage approvals increasing.
“Effective interest rates of around mid-2%, which in today’s environment seem like free money, show why buyers were keen to secure purchases.”
Steve Seal, CEO, Bluestone Mortgages:
“With the Bank of England continuing to push up rates to curb inflation, it’s hardly surprising there’s been an increase in mortgage lending activity.
“However, following the Chancellor’s mini-Budget last week and warnings that more significant rate rises are to come, we’ve already seen lenders withdraw products from the market, which will make it harder for would-be and existing borrowers to lock in a fixed rate.
“For those concerned about the current lending environment and how it will impact their homeownership dreams, we encourage you to speak with a mortgage broker.
“Now, more than ever, brokers have a crucial role to play in not only hand-holding existing and would-be borrowers, but highlighting the options available to suit their unique needs. And, for customers concerned about how further rises will impact their ability to pay off their mortgage, we urge you to proactively engage. Lenders are on hand to provide tailored support, the earlier you can engage, the more we can help.”
Emma Hollingworth, distribution director, MPowered Mortgages:
“Despite the cost of living and mortgage rates rising, it is positive to see a slight increase in mortgage approvals.
“Whilst we know headwinds lie ahead, it is positive to see the Government announce plans to cut stamp duty with the aim of stimulating the housing market further.
“However, with interest rates predicted to continue rising throughout the next six months, those looking for a suitable and affordable mortgages will need a quick and certain answer to what mortgages are available to them.
“At MPowered Mortgages, we are using data-driven innovation and targeted AI to help increase automation throughout the mortgage process, with the aim of speeding up and taking the stress out of the mortgage journey.
“We remain committed to supporting homeowners and homebuyers through these financially challenging times and will continue to develop our range of products to respond to the needs of our customers which includes offering free valuation, cashback options and longer-term mortgage deals.”
Almas Uddin, founding director of Revolution Brokers:
“Mortgage approvals have continued to climb skyward in recent months, despite mortgage rates increasing in line with numerous base rate hikes by the Bank of England.
“This has been spurred by a sense of urgency from the nation’s homebuyers, who are keen to secure what remain fairly reasonable rates in anticipation of further increases to come this year.
“With a number of lenders opting to cut their product range this week, we can expect to see the volume of mortgage approvals decline in the coming months, purely due to a reduction in consumer choice, particularly higher loan-to-value products.
“However, we don’t expect that this will cause buyer demand to evaporate completely and a robust level of market activity will remain.”
Jonathan Samuels, CEO of Octane Capital:
“The latest mortgage approval figures are certainly positive and demonstrate the continued strength of the market in the face of an increasingly uncertain economic backdrop.
“However, they don’t account for the recent turbulence seen within the sector as a result of inflationary pressures and a reduction in product choice, which is sure to dent the number of homebuyers opting to take the plunge in the coming months.”
Richard Pike, chief sales and marketing director at Phoebus Software:
“The Bank of England figures are significant on their own but when put in the context of what has happened in the past week since the mini-budget, there were already warning signs. Mortgage approvals increased enormously in August, but we need to hope those approvals got to offer stage before lenders pulled those rates in the past week, as many of the people who thought in August that their mortgage was sorted would now find that they had to pay two or three percentage points more than they were expecting.
“Interest rates already rose 22 basis points in August but this pales into insignificance when looking at the 90bp that they rose in just one day at one point on Tuesday.
“What the country is crying out for is for the government to produce a well costed, fiscally responsible budget that will steady the markets and reduce the need for such huge rate rises. We all have to hope that today’s meeting between the Prime Minister and the OBR can produce that and that the government will act before the end of November, or September’s stats will read in a way not seen since the credit crunch in 2007.”
