The number of mortgages being approved by UK lenders fell in April and borrowers repaid debt at a historic pace after soaring interest rates increased the cost of serving loans.
There were 48,690 new mortgages signed off in April, down from 51,488 in March, according to figures from the Bank of England. That’s the lowest since February.
Gross mortgage lending of £17bn in April was 25% lower than the average of the previous six months, highlighting the reduction in demand for loans as interest rates have risen.
There were 48,690 mortgage approvals in the UK in April 2023 according to the Bank of England, which is 5.4% lower than in March, 26.0% lower than a year ago & 25.6% lower than the average number of mortgage approvals between 2018 & 2019.#ukhousing #housing pic.twitter.com/hFuB4WYESB
— Noble Francis (@NobleFrancis) June 1, 2023
The BoE also reported that homeowners made the biggest net repayment of mortgage debt on record – if you ignore the pandemic period.
That suggests the rise in interest rates is encouraging borrowers to pay down their mortgages.
Households reduced overall mortgage debt by £1.4bn in April, the highest net repayment since records began in 1993 apart from one month during the COVID pandemic.
Many lenders, including the Nationwide, have already pulled fixed rate mortgage offers and replaced them with higher cost loans in response to the financial market moves
Thomas Pugh, economist at audit, tax and consulting firm RSM UK, said: ‘The fact that net mortgage lending turned negative in April, contracting by £1.4bn, the lowest level on record excluding the pandemic suggests house prices have further to fall.
“The small drop in mortgage approvals, partly reversing the rise in March, reinforces this message. Indeed, higher interest rates and falling real incomes will limit buyers ability to meet high prices. We expect a peak to trough fall in house prices of between 5% and 10%.”
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