Mortgage approvals rose in February but the total borrowed fell to its lowest level for years, excluding the pandemic.
Mortgage lending dropped from £2bn in January to £700m in February, according to the Bank of England. This is the lowest level since 2016, excluding the pandemic.
However, mortgage approvals rose to their highest level for three months, rising from 39,600 in January to 43,500.
Mortgage brokers were divided on the issue.
‘A 65% fall in net mortgage lending for February is staggering. These numbers don’t lie and paint a picture of a housing market on its knees. Far too many vendors still have unrealistic selling price expectations and will end up chasing the market down. Last year’s prices are gone. Buyers meanwhile are biding their time, unable or unwilling to overpay for overpriced property in a falling market. As more property comes on the market in the Spring, the pace of house price falls will accelerate,’ says Graham Cox, SelfEmployedMortgageHub founder.
‘Amidst the chaos of the Autumn jump in rates in the aftermath of Kwasi’s Budget, many people had to put their house purchase and remortgage plans on hold. However, as the new normal of higher interest rates settles in and rates begin to stabilise, we are now seeing a resurgence of interest in new, or newer home ownership. People are embracing the reality of higher long-term costs, and those who were considering remortgaging are seizing the opportunity to do something that might be better than staying on an SVR,’ says Samuel Gee, Manning Gee Investments director.
‘The lower mortgage lending figure is no surprise after the mini-budget chaos and subsequent lenders’ knee-jerk reactions by ceasing to lend for a period – this was always going to be the case sadly. Grown-up thinking needs to be employed by lenders to avoid affecting consumers’ financial confidence in this way unnecessarily. The mortgage market is looking positive and, pending no more government-created nightmares, we should see a reasonable improvement during Q2 and ongoing for 2023,’says Gary Bush, MortgageShop financial adviser.
‘Green shoots should appear in the property and mortgage markets by the end of the next quarter. Aside from interest rates, those looking for a change of scenery will inevitably contribute to an increase in stock levels and a plethora of options. The only hurdle will come if the lenders put the brakes on lending. However, given recent mortgage rate cuts in the face of base rate increases, it appears that there is still an insatiable appetite to lend. Indeed, brighter days are on their way,’ says Riz Malik, R3 Mortgages director.
