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Bank of England mortgage approvals

ended 29. November 2022

On Tuesday morning at 09:30, the Bank of England is publishing its Money & Credit report for October, which covers mortgages, savings, personal loans and credit card usage. Please answer the Qs below. If you're a Premium user, your response will be edited by an experienced journalist and appear at the top of the News Alert.

  • Are you seeing more people turn to unsecured personal loans and credit cards to shore up their finances as rates rise and energy bills soar? In short, are households under growing financial stress?
  • Are you seeing more people remortgaging or taking out secured loans (second charges) to free up some additional cash to help them through the cost of living crisis?
  • What was the demand for mortgages like in October (and November to date)? Has is fallen as people are nervous about buying ahead of potential house price falls?
  • In September, mortgage approvals for house purchases decreased significantly to 66,800 in September from 74,400 in August. Are you expecting to see this trend continue in October?
  • Are you seeing more people squirrel away money in savings accounts to help them through the potentially difficult 12-18 months ahead?

Any other thoughts and insights, jot them down. Please do NOT write War and Peace.

13 responses from the Newspage community

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Benjamin BlythVerified
Director at Houz Mortgages
Mortgage approvals for house purchase were down again in October and a continued decline is likely in the months ahead as tighter affordability assessments come into force due to the use of higher ONS cost of living figures by lenders and higher stress rates. However, in October and November, I have seen very few first-time buyers put off their plans to buy a home, despite a sharp increase in rates and their quoted monthly payments. Demand among that demographic remains strong due to the simple fact that rents are astronomical. Lender affordability continues to tighten but this is only negatively impacting those with ongoing unsecured financial commitments such as loans, car finance and credit cards, which reduce mortgage borrowing capacity. I have seen a small increase in requests for additional borrowing from existing homeowners, with some looking to consolidate debt and get their finances in order while others replenish savings spent on things such as home improvements. These people are releasing cash from the increased equity in their homes to give them a cash safety net as we head into what the Bank of England predicts will be a protracted recession.
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Samuel Mather-HolgateVerified
Independent Financial Adviser at Mather and Murray Financial
Zoopla have confirmed what we all really knew, namely that demand has gone off a cliff since the catastrophic mini-Budget. But that hasn't been the sole factor in destroying demand. A combination of rising interest rates, higher taxes and a lack of confidence among consumers has killed off any confidence in housing for the rest of the winter. Prices are likely to fall by around 20% and bottom out late Spring. This is when the Bank of England will wake up and reverse the terrible policy decision of raising interest rates too far and holding them for too long while the economy crumbles. Rates will come down and confidence will return. All the Bank of England is doing by pursuing this policy is inflicting pain on millions of homeowners and, indirectly, renters. It has no impact on imported inflation. A massive rise in unsecured debt is expected at a time of economic pain. What is unusual is that this is also a time of increasing rates, so this will mean those who can least afford it will be hit hardest. With increasing debt, rising rates, a worsening economy and energy bills to make your eyes water we really do need a government who can intervene to protect those on the lowest incomes. Unfortunately we seem to have one, and a central bank, that increases the burden on working people rather than alleviates it.
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Riz MalikVerified
Independent Financial Adviser at R3 Wealth
With rising mortgage rates and lower levels of disposable income, debt consolidation will be one way of reducing outgoings. Second charges have already seen a surge in new applications and will continue to do so as lenders tighten criteria to mitigate risk. If you are remortgaging to free up cash, use this as an opportunity to review your whole financial situation with a qualified adviser. In an economic downturn, it is not uncommon for unsecured lending to become more difficult. Many lenders reduced overdraft limits and credit limits after the Credit Crunch. However, secured lending is seen to be a better risk for lenders. Debt consolidation looks set to be one of the defining narratives in 2023.
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Imran HussainVerified
Director at Harmony Financial Services
Enquiries from home movers have disintegrated since Kamikwasi's mini-Budget. Trussonomics gave our economy and the property market an absolute battering. There are still lots of enquires for remortgages, and first-time buyers are still active as rents have one through the roof.
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Paul Holland0
Mortgage Broker at Henchurch Lane Financial Services
Rates haven't been as high as they are for ling enough for us to see trends like people borrowing more on unsecured loans or credit cards, this will become more apparent to the broker community later down the line once higher repayments really start to take effect. If people are aware and start to budget before their fixed rate comes to an end, it should put them in as strong a position as possible to weather the storm. We've noticed a shift in people's approaches to borrowing as a result mortgage rates rising. They're much more inclined to opt for things like further advances, second charges and unsecured loans to fund things like home improvements and debt consolidation. This is in part down to good advice, but most can work it out for themselves that remortgaging out of your lower fixed rate is no longer a sensible approach to borrowing. The levels of mortgages on the lead up to these rises were unprecedented and had a huge impact on the industry's service levels. A dip in enquiries isn't the end of the world for market. Prices need to level out and go through some degree of correction.
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Robert Bolohan0
Co-Founder at Lotuly
Personally, I'd stay away from loans, credit cards and more debt. With every single thing going up in price the usual method is to ask for finance on everything you can but that will build up your own debt in the future and who knows if you are even able to pay it in the end the way things are going. A lot of friends are remortgaging and trying to stay afloat. But I've also seen a lot of buyers having more cash than ever. I've seen a couple of interesting houses for sale and most of the other interested parties were purchasing with cash. From a buyer point of view people are fierce and some don't even depend on mortgages if they are eyeing their second property purchase but there seems to be a lot more people selling and downsizing. Mortgage approvals are harder than ever. I know this thanks to my broker I don't know about others but I am trying to save money myself and have done for a long time since all this madness started. I think it's a sensible thing to do.
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Scott Taylor-Barr0
Principal Adviser at Barnsdale Financial Management
The number of purchase enquiries has certainly fallen, but whether that is simply the natural drop we would expect as we approach December and everything becomes a "next year" job, or whether this is an actual decline in house buying activity, we'll have to wait until January to find out. Remortgage and Product Transfer/Switches remain the most active part of the mortgage market currently, with lots of people coming to the end of their current deals in the next six months and wanting to get an idea of how much their mortgage payment is going to increase by.
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Graham CoxVerified
Director at Bridging Hub
We've seen an upswing in remortgages with debt consolidation in recent months as clients try to reduce their monthly payments on credit card debts. For those with plenty of equity, consolidating from 20% plus to 5% can help people escape a financial hole, even though they could end up paying more interest overall.
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Marcus WrightVerified
Managing Director at Bolton Business Finance
I am expecting to see another fall in mortgage approvals as the impact of the base rate starts to show. We are seeing property investors much more cautious and in some cases shocked at how high rates currently are. Higher rates potentially mean that affordability checks and stress tests are harder to pass. It's more important now than ever to speak with a broker when looking at either personal, buy-to-let or commercial mortgages.
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Matthew JacksonVerified
Director at Mint FS
New purchase enquiries, whether from first-time buyers or home movers, have fallen noticeably over the past couple of months. But at this stage it is unclear what percentage of this drop is the natural fall as we head towards Christmas and what is the lasting effect of the mini-Budget. The purchase market resets every January and finds its level, and I suspect as interest rates begin to stabilise, more buyers will stick their heads above the parapet and look for bargains. After all, fewer active buyers have the advantage of less competition. We have seen an undoubted shift towards refinance options. Borrowers are looking at remortgaging or more specifically securing further advances to consolidate debt or improve their current homes, and if this does not work they are moving onto secured loans. For second charges, or secured loans, we have seen enquiries double since September and this is a market that typically grows quickly in a market with rising first charge interest rates.
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Hannah BashfordVerified
Director at Model Financial Solutions
We have definitely seen less demand for house purchases in October and November. This isn’t unusual for November as people decide to wait until the New Year to get everything in order but it was a big change for October. We have several first-time buyers who are still keen to go ahead but they have big deposits and and are willing to negotiate. A few homeowners with mortgages are turning to debt consolidation to reduce their overall costs but as of yet I haven’t seen anyone borrowing to provide funds for day-to-day living. People seem to be more careful at the moment and some of my clients who are currently on low interest rates have been talking to me about making overpayments to their mortgage now so that when they come to remortgage in 12 months' time, they will have a lower commitment going onto a higher rate. Thankfully, people seem much more aware of their budget and what they are spending and this preempts any problems if there is a deficit in their budget.
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Natalie Hines0
Founder at Premier One Mortgages
Mortgage applications have definitely been slower but we are still seeing first-time buyers making offers as, for them, falling prices as an opportunity to get onto the property ladder. The balance of power has shifted very clearly to buyers now. Requests to borrow extra money for debit consolidation have also increased, and I encourage all my clients to do a simple income and expenditure exercise to see what's coming in and what's going out so we can get a good idea about what disposable income they have every month.
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Austyn JohnsonVerified
Founder at Mortgages For Actors
Within my niche sector of the mortgage market, I'm not seeing my clients turning to credit because they are struggling yet, which is a positive. I am also advising them to keep a contingency fund to protect them in the potentially turbulent months ahead. As for approvals, we check our cases with the lender presubmission and fully package, so we don't get a lot of declines. I can think of only one in the past three months where no explanation was given for it. Buy-to-let investor demand has dropped, but residential has stayed steady, but I'm sure if house prices continue to drop then investors will be back in the game looking for bargains. With rate rises steadying off a bit now, confidence will begin to grow again.