Mini-budget fallout sees mortgage approvals slide further
By Josh White
Date: Wednesday 04 Jan 2023
(Sharecast News) - Mortgage approvals in Britain plunged much more than expected in November, according to fresh data on Wednesday, as the fallout from the ill-fated mini-budget of the short-lived Truss administration lingered.
According to the Bank of England, around 46,100 mortgages were approved in the month, sliding from a revised total of 57,900 in October.
It was also well below the 53,000 total that economists had been expecting.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the sharp fall came as "no surprise", given the tentative fall in quoted mortgage rates from October's high levels and the withdrawal of some lenders in the wake of Kwasi Kwarteng's mini-budget.
"Surveys suggest that mortgage approvals will remain very low, if not fall further, in the near term - a net balance of -38 surveyors reported in November that new buyer enquiries increased on the previous month, according to RICS, while a net balance of -33 households thought in December that it is a good time to buy a home, according to the Building Societies Association," Tombs said.
"Note that comparatively low 3.35% effective rate for new mortgages in November, up just 26-basis points from October and well below the 5.5%-to-6.0% range for new quoted rates, simply reflects time lags.
"The effective mortgage rates data refers to completed housing transactions, relating to mortgages agreed with lenders a few months ago."
Samuel Tombs said the effective rate on new mortgages would likely soar to between 5.5% and 6.0% at the start of next year.
"And while daily data from Moneyfacts show that mortgage rates have continued to fall since November, home ownership will remain a distant dream for many until either house prices or mortgage rates fall much further."
Reporting by Josh White for Sharecast.com.
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