The amount of mortgages being accepted fell in June 2022 in the face of rising cost of living and borrowers trying to stretch lending beyond their means. With rising inflation and economic struggles felt by the country, it was predicted that mortgage borrowing approvals would start to decline but according to reports by the bank of England, June 2022 showed much lower figures than they thought!
In June 2022, Mortgage lenders approved 63,726 loans, down around 3% from May 2022 and the lowest amount in two years. As mentioned above, with the rising cost of living and rising property prices, borrowers took out an extra £1.8 billion of unsecured debt, compared to the £1.2 billion averaged in the previous six months.
The fall in mortgage lending points to a loss of momentum in the housing market, which actually boomed during the pandemic as people spent more time in their properties and considered buying and selling a lot more than they would have normally done. Lloyds Banking Group Plc, the biggest UK mortgage lender, this week predicted house prices will grow just 1.8% this year before reaching a climax and falling to 1.4% in 2023. Another major factor is the rise in interest rates which we have been reporting over the last few weeks as more and more lenders ramp up their rates.
The Bank of England released figures recently that showed the average interest rate on new mortgages rose to 2.15% in June, the highest level since late 2016. Although not astronomically high, its quite a shock to the system as we have been used to such record low rates for so long.
Content and communications manager at Oportfolio Louis Mason had this to say:
“At first glance, these might seem like worrying figures. Yes, I have to admit, we would all like to see ‘Mortgages being accepted increased tenfold!’ as the headline but unfortunately, we probably won’t see anything close to that until at least next year.
Although we are all aware that lenders are making things harder for borrowers and the cost of living is seriously squeezing the general public, that doesn’t mean that there is absolutely nothing you can do. Billions of pounds worth of lending is still happening every month and by speaking to a mortgage specialist like Oportfolio, you will get the best chance of getting your mortgage approved too.
I have to agree with Lloyds banking group’s hypothesis that house prices will come down in 2023 so for those of us who are struggling with mortgage affordability may be thrown a lifeline in 2023. We will have to see.”
If you or anyone else you know wants to discuss a new mortgage with one of our advisors, please give our friendly team a call today to see how we can help.