Surge in mortgage approvals as home-buyers race to lock in loans, amid market 'headwinds' warning

Surge in mortgage approvals as home-buyers race to lock in loans, amid market 'headwinds' warning
Surge in mortgage approvals as home-buyers race to lock in loans, amid market 'headwinds' warning

Arabnews24.ca:Friday 30 September 2022 09:38 AM: Mortgage approvals have surged as home-buyers race to lock in loans ahead of further interest rate hikes, latest figures indicate.

The increase comes amid warnings of mounting "headwinds" facing the already slowing housing market in the face of rising inflation and the economic turmoil triggered by the chancellor's mini-budget.

Kwasi Kwarteng's borrowing-funded tax cut plans have raised the prospect of the Bank of England acting even more aggressively on interest rates, resulting in higher mortgage costs.

UK economy latest

In response to the uncertainty, many mortgage products have been pulled by lenders.

The industry has also said stamp duty cuts unveiled as part of the package to boost house sales have been "wiped out by the tsunami of market volatility since".

According to the Bank of England's Money and Credit report, some 74,300 mortgage approvals were recorded in August, up by 16% from 63,700 the previous month.

More on Uk Economy

This is the highest level since 74,500 approvals were recorded in January and follows a slide in previous months.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The sudden leap in house purchase mortgage approvals in August to their highest level since January likely reflects people attempting to secure loans ahead of expected increases in mortgage rates, rather than a fundamental strengthening of demand."

Advertisement

Founding director of Revolution Brokers, Almas Uddin, said: "Mortgage approvals have continued to climb skyward in recent months, despite mortgage rates increasing in line with numerous base rate hikes by the Bank of England.

"This has been spurred by a sense of urgency from the nation's home-buyers, who are keen to secure what remain fairly reasonable rates in anticipation of further increases to come this year."

Please use Chrome browser for a more accessible video player

2:46
Chancellor 'sticking with plan'

Meanwhile, Nationwide Building Society reported house price growth stalled month on month in September, but, on an annual basis, property values were still 9.5% higher than a year earlier.

Estate agents said there could be some re-negotiations against a backdrop of rising interest rates - and if this becomes a trend it could impact house prices.

Across the UK, the average house price in September was £272,259, Nationwide said.

Read more:
Fiscal watchdog to deliver mini-budget forecast after rare meeting with PM

Bigger headache to come if chancellor's sums found not to add up - Analysis

Robert Gardner, Nationwide's chief economist, said: "In September, annual house price growth slowed to single digits for the first time since October last year, although, at 9.5%, the pace of increase remained robust."

He added: "By lowering transaction costs, the reduction in stamp duty may provide some support to activity and prices, as will the strength of the labour market, assuming it persists, with the unemployment rate at its lowest level since the early 1970s.

"However, headwinds are growing stronger suggesting the market will slow further in the months ahead.

"High inflation is exerting significant pressure on household budgets with consumer confidence declining to all-time lows."

Andrew Montlake, managing director of mortgage broker Coreco, said: "The days of double-digit growth may not return for a long time.

"The level of uncertainty in markets, and being felt by consumers, is off the charts.

"The brief surge in sentiment caused by the stamp duty announcement on Friday has been wiped out by the tsunami of market volatility since."

Get the latest news delivered to your inbox

Follow us on social media networks

 
c 1976-2021 Arab News 24 Int'l - Canada: كافة حقوق الموقع والتصميم محفوظة لـ أخبار العرب-كندا
الآراء المنشورة في هذا الموقع، لا تعبر بالضرورة علي آراء الناشرأو محرري الموقع ولكن تعبر عن رأي كاتبيها
Opinion in this site does not reflect the opinion of the Publisher/ or the Editors, but reflects the opinion of its authors.
This website is Educational and Not for Profit to inform & educate the Arab Community in Canada & USA
This Website conforms to all Canadian Laws
Copyrights infringements: The news published here are a feed from different media, if there is any concern,
please contact us: arabnews AT yahoo.com and we will remove, rectify or address the matter.