The Bank of England have released figures over the last couple of days that show mortgage approval has decreased significantly in recent months since the cost-of-living crisis and rate increases. The Bank, which controls interest rates and the price of borrowing in the country among other things, has been steadily increasing their base rate over the last few months to tackle rising inflation. However, as a result of the former chancellor’s intention to cut taxes (the opposite of what the BOE wanted), they dramatically increased their base rate.
Caught completely off-guard, mortgage lenders didn’t know what to do and the mortgage market fell into a state of chaos with lenders hiking up their own interest rates or completely stopping lending. A lot of lenders also tightened their affordability testing, making it more difficult for people to borrow higher loans. Thankfully the market has balanced out a bit and a lot of lenders are starting to bring rates back down slightly, but it seems that the caution is still very much there. According to the BOE, the amount of mortgage applications being approved by lenders in the UK is decreasing noticeably.
What Do The Figures Show About Mortgage Approval?
From the new figures released by the Bank of England, we can see that the number of approved mortgage applications for house purchases fell from 74,422 to 66,789 in September 2022. A drop of £7,633. That also meant that the value of purchases fell during the same period, from £17.6 billion to £15.9 billion. The remortgage figures are down too however not as significantly as the purchase figures. Remortgage approvals decreased from £49,532 to 49,122. A decrease of 410. The total value of the lending dropped from £10.7 billion to £10.4 billion.
The figures aren’t all terrible, however. The BOE also announced that net mortgage borrowing for the entire country came to £6.1 billion, the same as August 2022, an increase on the past 6-month average of £5.7 billion in borrowing. Total gross mortgage lending tallied up to £27 billion, an increase on August 2022’s figure of £25.9 billion.
What Can Borrowers Do To Stand A Better Chance
The best thing any borrower can do, including home movers, remortgagers, buy-to-let investors, is to speak with a professional advisor. Yes, we have a bias as mortgage brokers, but it really is the best way to stand a chance of getting a loan approved. The main reason that people’s applications are rejected or not approved is due to not being experienced with mortgage lenders. By that we mean, people applying for a mortgage without knowing what they can realistically borrow, what mortgage lenders accept or don’t accept, and what documents are required.
With the help of a mortgage advisor, you can make sure that you aren’t applying for a loan that is above your borrowing potential. Your mortgage advisor will be able to search the market for the most generous lenders, research all of the unique criteria that each lender has, and work closely with the lender to make sure you get the best chance of getting your loan approved.
If you or anyone else you know is interested in getting a new mortgage or are worried about mortgage approval rates, please give our specialist advisors a call today for a free mortgage consultation.