Statistics recorded and released by the Bank of England show that mortgage approvals on average have slumped and fallen for the fifth month in a row. This means that more mortgage applications, which would normally go through to offer smoothly, are being declined or are not going all the way through at a higher rate than before. So what is causing this?
Mortgage Approvals In The First Few Months Of 2023
The mortgage market first began to see signs of instability when the inflation in the UK began to creep up and the cost of living increased. This was then exacerbated when the mini-budget in September 2022 was announced to mass criticism. The Bank of England immediately raised the base rate in an attempt to calm the already spiralling inflation. As a reaction to this, almost all mortgage lenders and banks increased their interest rates or completely pulled products to ensure that lending was still profitable for them. And that is where we found ourselves at the end of 2022. With interest rates of 6 and 7% and a mortgage and property market in tatters.
But, things didn’t stay so bleak for too long. The mortgage market is recovering in most areas and mortgage lenders are bringing down their rates on a daily basis as inflationary pressures cool. You can now secure a fixed term mortgage at below 4% however, the strict lending and affordability policies that the banks implemented during the height of the mini-budget mortgage crisis still remain in a lot of cases. In an attempt to limit lending and the risk of losing money on borrowers who can’t afford the mortgage in a financial crisis, many lenders moved their affordability goalposts and tightened their income multiples. Meaning that people could have easily afforded a loan a year ago, were being rejected for that same amount because the bank deemed the loan unaffordable for them. This seems to be having a huge knock on effect and is probably the primary reason for mortgage approvals being so low.
Facts And Figures From The Bank Of England
According to The Bank of England, there were 39,637 mortgage approvals made in January 2023 compared to 40,540 approvals in December 2022. December’s figure was also down on 46,100 in November 2022 and 57,900 in October 2023. A drop of 18,263 mortgage approvals in 3 months alone. The Bank of England says that January 2023 is the lowest recorded number of mortgage approvals since January 2009 after the 2008 market crash, when it recorded only 32,400. The Bank of England also announced that approvals for remortgages fell from December 2022 to January 2023, from 26,228 to 25,357.
How Can I Get My Mortgage Approved?
Of course everyone’s circumstances are different and there are people in certain circumstances where getting a mortgage approved is not possible e.g. Recent bankruptcy, recent repossession, financial crime convictions, the loan simply not being affordable etc. If you earn a good income, have a good deposit, do not have lots of already unmanageable debt, then you stand a good chance of getting your mortgage approved with the help of a mortgage advisor. Mortgage applications done through a qualified and experienced advisor are much more likely to go through than if you decide to go it alone and apply direct to the bank.
At Oportfolio mortgages, we will go through a thorough mortgage affordability check with you before we submit any applications, to make sure that everything adds up and everything will be approved by the lender before hand. So that when it comes to submitting your mortgage application for you, the chances of it not being approved are minimal.
If you or anyone you know is looking to get a new mortgage, please give our mortgage advisor tram a call today for a free initial mortgage affordability conversation and check. We are here to help.