Rising interest rates have hit demand for mortgages, as economists predict prices will fall in 2023
The number of mortgages approved by UK lenders fell by 10% last month, after Kwasi Kwarteng’s mini-budget caused turmoil in the markets.
Mortgage approvals for house purchases decreased to 59,000 in October from 66,000 in September, new data from the Bank of England shows.
Monthly mortgage approvals for the purchase of homes are running below long run averages, which may be a sign of things to come. The mini-budget weighed heavily on sentiment and it’s now clear many buyers have opted to postpone acting at least until the other side of Christmas, but we’d expect activity to be subdued until 2023 while borrowers digest what is a “new normal” for interest rates.
Average mortgage rates surged during October amid the chaotic days following the mini budget. It wasn’t until very recently that lenders began dropping rates following the Bank of England’s intervention and subsequent scrapping of the government’s most controversial proposals.
“Those rate cuts will come through in November’s data, but we probably won’t see much further easing until the new year. The positive news is things have settled down, but the market still feels very finely balanced.
