Mortgage approvals slump as ‘autumn housing market pick-up fails to materialise’

The number of mortgages approved to home buyers fell to the lowest level since January in September, while remortgage approvals slumped to a 24-year low, according to Bank of England figures.

In an indication of future borrowing, 43,300 mortgages were approved for house purchase in September, marking the lowest monthly total since January 2023, the Bank’s Money and Credit report showed.

And 20,600 remortgaging approvals were recorded in September – the lowest level since January 1999. The remortgaging figures only capture remortgaging with a different lender.

Simon Gammon, managing partner at Knight Frank Finance, said: “The traditional autumn pick-up in housing market activity failed to materialise this year.

“Mortgage rates have eased to a plateau following a volatile year and it’s going to take some time for buyers to get to grips with what they can now afford.”

He added: “We could see some more marginal cuts to mortgage rates before the end of the year if we see the headline rate of inflation dip into the 4% to 5% range.

“We’d expect five-year fixed-rate products of around 4.5% in that scenario, down from about 4.8% today. While that’s what many borrowers would consider expensive, it’s certainly better than the 6.5% five-year fixed rates we had a little under a year ago.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “While the direction of travel for new mortgage rates is generally downwards, we have seen a few lenders pull rates in the past few days, although this has been primarily in order to slow business.”

Ranald Mitchell, director at Norwich-based Charwin Private Clients, said: “The fact remortgages are at a 24-year low underlines how exposed the average UK household is as people come off ultra-low rates.

“October, however, has seen a significant uptick in activity with a much healthier number of purchase inquiries and an increase in remortgages.”

Looking at non-mortgage borrowing, the annual growth rate for all consumer credit rose to 8.0% in September, the highest rate since November 2018.

This was partly driven by a 12.5% annual growth rate for credit card borrowing in September.

The combined net flow of household deposits with banks and building societies and NS&I accounts jumped from £0.2 billion in August to £7.0 billion in September.

Households’ net deposits flowing into NS&I accounts rose sharply to £7.7 billion in September, the highest level recorded since August 2020.

Mark Hicks, head of active savings at Hargreaves Lansdown, said: “A wall of money rushed into NS&I in September. It dominated the one-year fixed-rate market and hoovered up cash maturing from the dash into fixed rates a year earlier.”

Alice Haine, personal finance analyst at investment platform Bestinvest, said: “The era of cheap money is well and truly over, so households should prioritise clearing expensive unsecured debt and building up a rainy-day pot to withstand any unexpected expenses.”

She added: “Those fortunate enough to have spare money to save should move fast, as the top deals get snapped up quickly. The best rates on easy access, notice and some cash Isas are potentially at or near the peak, so locking in a high fixed rate now can help more savers achieve an inflation-beating return over the next year, if price rises continue to ease.”