BoE: Mortgage approvals at lowest level since May 2015

Ryan Fowler

July 29, 2016

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Mortgage approvals dropped to the lowest level since May 2015 in June as 64,766 mortgages were approved. 

The central banks figures have been showing a trend of decline in the approval numbers since the start of the year. In May the 66,722 mortgages were approved.

However net mortgage lending rose £3.35bn  in June but this is still  considerably short of the this year’s peak of £7.275bn recorded in March.

Remortgagers reap the rewards

Jeremy Duncombe, director, Legal & General Mortgage Club, said the fundamentals are in place for the market to continue to be positive.

He said: “Mortgage approvals have remained flat for some time now, so it’s not surprising that these figures from the Bank of England paint a similar picture, particularly amid the run up to last month’s EU referendum.

“Though there has been some concern about the impact of uncertainty following the vote, demand for property is still there and the fundamentals of the market continue to be positive in the face of Brexit.

“The remortgaging market has remained strong over this period, with lenders continuing to offer competitive deals. Now is therefore a good time for consumers to review their current mortgage arrangements. Borrowers would be prudent to this take the opportunity to speak with a financial adviser, so that they have the best chance of securing a new deal that is right for their circumstances.”

But Andrew McPhillips, chief economist at Yorkshire Building Society, said he expects the market to remain subdued for some time yet.

He said: “Activity dipped slightly in the mortgage market in June as a result of people moving house purchases forward to earlier in the year to beat the new stamp duty rate introduced in April, causing subsequent months to be quieter. Uncertainty ahead of the EU referendum may have also played a role in this slowdown, but it is likely to have had less of an influence compared to the effects of the increase in stamp duty for landlords.

“We expect market activity to remain relatively subdued as people wait to see how the outcome of the referendum affects the wider economy, subject to any intervention that the MPC might impose next week. That said, people’s desire to own a property remains strong, which should support mortgage demand in the coming years.”