UK mortgage approvals fall in sign of weakening housing market

UK MORTGAGE approvals fell to the lowest since the early stage of the pandemic as rising interest rates dampened demand for property.

Banks and building societies authorised 59,000 home loans in October, the fewest since June 2020 and down from 66,000 in September, according to data released on Tuesday (Nov 29) by the Bank of England (BOE). The drop was larger than economists expected.

Despite easing from highs seen during the recent market turmoil, two- and five-year fixed rate mortgages still hover around 6 per cent. That’s tightening the squeeze for millions stung by rising costs elsewhere.

The BOE figures show the average rate on new mortgage loans increased by 25 basis points in October to 3.09 per cent.

Forecasts for property prices have already turned negative. Earlier this month, the Office for Budget Responsibility said it expects values to lose 9 per cent over the next two years, with the average rate on outstanding mortgage stock remaining near 5 per cent until at least 2028. BLOOMBERG