The UK mortgage market saw a rise in mortgage approvals last month, reaching the highest level since October 2022. The sudden surge can be attributed to the expected interest rate hikes as borrowers try to get ahead of the anticipated changes to borrowing costs. Read on to learn more about the details of the recent increase in mortgage approvals.
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 new figures from the Bank of England, there was a surprising increased demand for mortgages, rising to 54,700 in June from 51,100 in May. This all comes as a shock to many in the industry as approvals were expected to fall to 49,000. Along with this activity, there has also been an increase in remortgaging activity, rising by 5,000 to 39,100 between May and June.
Unfortunately, despite this increase, year-on-year mortgage approvals were down 15%. And analysts feel like this unexpected pickup in demand isn’t sustainable, beyond maybe another month of increased activity. July’s increase in demand will come down to borrowers looking for tracker products, taking the gamble that rates will ease in the future. They’re also banking on the prospect that they can fix at a better rate in the next few months.
But what exactly led to this recent increase in mortgage approvals?
Experts say it’s likely due to borrowers scrambling to secure a new mortgage deal before all the affordable mortgage products are no longer available because of the interest rate hikes.
This is all due to Threadneedle Street’s Monetary Policy Committee (MPC) latest interest rate decisions, as borrowers anticipate another rise to the already 5% rate. Financial markets are predicting a quarter-point increase as the Bank attempts to fight back against the ever-increasing rate of inflation.
It will take some time for higher home loans to have a true impact on demand. The market operates on a two to three-month delay for quoted mortgage rates to contribute to market activity. This surge of approvals could very well be the product of when the rates were still decreasing in April. So, expect the full effect of this hike to be seen later on in autumn.
If you’re in the market for a mortgage and want to secure the best deal, get in contact with the experts at Dental & Medical Financial Services today.