Lenders in the UK approved just 43,328 mortgages in September 2023, the lowest since the beginning of the year.
Net approvals for remortgaging also fell, to 20,600, the lowest since January 1999, according to Reuters. The collapse reflected the impact of the rise in borrowing costs, and how many homeowners have no choice but to stick with their existing mortgages, and pay down their debts if and where they can.
Rising costs
The increase in mortgage interest rates is on top of all the other expenses associated with purchasing a new home, such as stamp duty, building survey fees, and fees for conveyancing. Homebuyers are having to shop around to keep their costs low and make sure they’re not paying up for more than they need. For example, choosing the right level of building survey for the property they’ve settled on can help keep fees to a minimum.
Keeping the balance
Although the Bank of England paused the rises in interest rates in September, economists have warned that the full impact of rises over the past year has yet to reveal itself, as millions of households have still not reached the end of their cheaper, fixed mortgage deals and face a significant hike in interest payments over the coming year. Although the interest paid on new mortgages sits at just over 5%, the average rate on outstanding mortgages is still significantly lower at 3.14%.
Economists have also warned that the impact could trigger a recession and a larger drop in house prices. Property portal Zoopla has reported that house prices are falling faster than at any time since 2009. Until homeowners start to feel the effect of falling rates in the future, analysts are not expecting a recovery any time soon.
