Remortgaging approvals at their lowest since 1999

Latest Bank of England figures have shown that remortgaging approvals fell to 20,600 in September, making this the lowest level since January 1999.

Net borrowing of mortgage debt by individuals decreased from £1.1 billion in August to -£0.9 billion in September – the lowest since April 2023.
Net mortgage approvals for house purchases fell to 43,300 in September, the lowest level since January 2023. Additionally, gross lending fell from £19.4 billion to £18.6 billion, coinciding with a rise in gross repayments from £19 billion to £19.5 billion.

Net borrowing of consumer credit by individuals amounted to £1.4 billion in September, down from £1.7 billion in the previous month.

StepChange responds to Bank of England Money and Credit statistics Richard Lane, Director of External Affairs at StepChange Debt Charity, said “The continued drop in mortgage and re-mortgaging approvals, the latter of which has fallen to the lowest level in almost 25 years, is not surprising considering the sustained period of high interest rates. Meanwhile, there is still little indication of how long rates may remain high – leaving borrowers with little hope of respite from soaring housing costs.”

“With the weather turning colder, households are now facing a rise in energy bills which will be particularly difficult for those who have secured a new mortgage deal this year at a much higher rate, and for renters who may have seen those borrowing costs passed on. As finances get tighter, there’s a risk that people may begin to turn more to credit to cope, and get trapped in an expensive borrowing spiral. Lenders must be alert to any customers who are showing signs of difficulty early, offering tailored support and signposting to debt advice.”

Carl Parker, National Director at Just Mortgages, said: “Despite the positive trend we have seen with mortgage rates in recent months, today’s data demonstrates the difficult climate we still find ourselves in as borrowers continue to adjust to a higher interest rate environment. Even as rates improve, there’s no question affordability remains the biggest challenge facing borrowers. It’s up to brokers to stay proactive and provide the necessary guidance and assistance needed to educate clients, increase confidence and help them enter and navigate the market.”

“Through appearances at housing fayres and exhibitions, we’ve been encouraged by the fact that the appetite is still there among young people especially to buy their own home. While the path to homeownership is not as straightforward, our message has been that there are still routes available. Schemes such as Shared Ownership remain a front runner and most likely the only way for many to make this aspiration a reality. Increasing education will continue to be a primary focus for brokers moving forward, highlighting the variety tools, schemes and options available to support borrowers of all backgrounds.”

Simon Webb, Managing Director of capital markets and finance at LiveMore, said “The sharp fall in net mortgage lending in September is in stark contrast to the previous four months where net lending increased. However, a fall was expected as mortgage approvals have been declining for the past three months as less people consider moving home. House prices are coming down and there is more housing stock on the market, but higher interest rates are putting people off during a cost-of-living crisis.”

“Remortgaging to a different lender is down to its lowest figure in almost 25 years, which I suspect means product transfer numbers are higher. It is easier for borrowers to stay with their current lender as they do not have to go through the affordability assessment in the same way that a remortgage requires.”

Katie Pender, Managing Director at Target Group, said “Mortgage approvals have been falling for some months now, but this is a significant drop, especially for remortgages.  With so many people due to come off fixed rate deals before the end of the year the drop in remortgage approvals is a little surprising.  The question is, are people just rolling onto SVR’s waiting to see what will happen with interest rates if inflation continues to fall?”

“The UK housing market is in a state of flux and it is very likely that it will stay that way at least until the end of the year, and into 2024.  However, lenders need to lend, and we have seen many lenders offering more favourable rates recently.  Whether the current deals on offer will be enough to tempt people to buy, or even fix, remains to be seen.  Confidence may be low but if the prime minister’s pledge to halve inflation before the end of the year comes true, we may see the market pick up earlier than many have predicted.  What is certain is that this is the time for more government intervention into what is an increasingly broken housing market.”

“Remortgaging to a different lender is down to its lowest figure in almost 25 years, which I suspect means product transfer numbers are higher.  It is easier for borrowers to stay with their current lender as they do not have to go through the affordability assessment in the same way that a remortgage requires.”