The impact of increased borrowing costs over the last few months is continuing, despite the summer months usually bringing a mortgage approval boom. In July, the number of approvals fell to its lowest level in five months, providing more evidence that borrowing costs are affecting the wider economy. Find out what this means for the housing market by reading on.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
According to figures from the Bank of England, the number of new loans that have been approved but not yet completed experienced a drop of 10% from June to July, falling from 54,600 in June to 49,400 in July. Normally, July is a busy month when it comes to home buying, but year on year, approvals were down 20% below the figures recorded in 2022.
Experts point to the Bank of England’s 14 consecutive interest rate hikes as the reason for lower demand for property. Rates have gone from .1% to 5.25% over the last few years and many predict further rises still to come. With such high interest rates, it’s no wonder that demand in the mortgage market is experiencing a hit.
Earlier this year, mortgage rates soared and we’re now in the middle of the consequences of this, but we won’t know the full effect for another month or so as there is usually a lag of a few months after rates go into effect. And since rates are still increasing, the mortgage market likely won’t turn around for some time. In fact, experts predict that mortgage approvals will fall to the same level as the peak from last November.
So, if you’re in the market for a home, tread carefully. Only make the leap if you are certain you can afford to take on the costs that are currently ruling the market.
To learn about your options for mortgage products, be sure to speak with an adviser to get the best deal. The experts at Dental & Medical Financial Services are here to help you.