Mortgage approvals to fall by 13% for house purchases

Many homeowners turned to remortgaging this year, market analysis reveals

Mortgage approvals to fall by 13% for house purchases

Mortgage approvals across the UK property market are expected to dip this year, driven by a 13.4% reduction in buyer demand for residential house purchases.

The latest mortgage market analysis by specialist property lender Octane Capital, based on Bank of England mortgage data estimates, has predicted that the total number of mortgage approvals will sit at just shy of 1.57 million by the end of 2022, averaging 130,764 per month.

This level of total market activity would mark a 0.2% drop when compared with last year’s, with the residential subsector mainly driving the decline. Octane Capital estimates that mortgage approvals for residential house purchases are set to fall to a total of 818,641 in 2022 – a drop of 13.4%.

However, mortgage approvals for those remortgaging are set to climb by 24% on an annual basis, and while topline market performance is expected to stutter in 2022, the total level of mortgage approvals seen across the UK will remain some 2.8% higher than they were five years ago and 36.3% above the level seen in 2012.

While residential house purchases are set to drive the dip this year, the annual total also remains 2.6% higher when compared to five years ago, and 33.8% up on 2012.

Read more: The latest on UK property transactions revealed.

“We predict that 2022 will see a very marginal decline in topline mortgage approvals and, at first glance, this suggests that the sector will have weathered the rather ferocious storm that has broken in recent weeks,” Jonathan Samuels (pictured), chief executive at Octane Capital, commented. “However, when dissecting the market by type of mortgage approval, it’s clear that the damage done to the residential market has been far more pronounced.

“In fact, we expect to see mortgage approvals for house purchases take a notable dip come the end of this year. This is due to the recent turbulence seen across the mortgage market, with growing uncertainty and an increased cost of borrowing deterring many buyers from progressing with their purchasing plans.

“At the same time, we’ve seen many existing homeowners rush to remortgage in order to secure a favourable rate before any further increases materialise, as well as an uplift in those borrowing more on their existing mortgage, with both areas of the market bringing a degree of stability where total mortgage approval levels are concerned.”