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Bank of England Money & Credit report October 2023 - reaction

ended 29. November 2023

This morning, the Bank of England published its October Money & Credit report, which showed, among other things, that net mortgage approvals for house purchases rose from 43,700 in September to 47,400 in October, and net approvals for remortgaging increased from 20,600 in September to 23,700 in October. Newspage sought reaction from brokers, below.

14 responses from the Newspage community

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Rohit KohliVerified
Director at The Mortgage Stop
With mortgage rates coming down almost daily, there's cautious optimism in the mortgage market at present. But the lender rate wars that are ongoing could be threatened by upcoming energy cost hikes, which could apply upwards pressure on inflation. Lower rates have definitely stimulated demand and if rates dip below 5% for high loan-to-value mortgages, that will only increase. However, 2024 poses risks with many borrowers facing higher refinancing rates, potentially impacting the economy. We're seeing increased interest from first-time buyers and buy-to-let investors alike but it's nowhere near the levels it was pre-mini-Budget. The next Monetary Policy Committee meeting is going to lay the groundwork for 2024 and, with the economy on a knife edge, I think the decision will be very tight whichever way it goes.
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Ken JamesVerified
Director at Contractor Mortgage Services
October's increase in net mortgage approvals reflects what we're seeing on the ground, namely that buyer appetite is returning. And while 2024 is going to start quietly, I feel it will end with a bang. First-time buyers will be a strong sector of the market next year and lenders will be looking to cash in, especially if rates continue to come down anywhere close to the low 4% mark. Confidence will start to ease people out of their shells and into the marketplace. I for one am looking forward to what 2024 has in store and will be happy to see the back of 2023.
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Ranald MitchellVerified
Director at bad credit mortgage specialists Charwin Mortgages
Cheaper rates seem to be improving sentiment, with mortgage approvals rising in October. Lenders need to lend so mortgage rates will continue to edge down while the property market remains as lethargic as it is. We have yet to reach the consumer confidence tipping point, and with Christmas around the corner, it will likely be 2024 before things take off. Sub-4% rates, even with larger fees, will likely restore mortgage confidence. Based on their pricing, lenders seem to have more appetite for first-time buyers or home movers than for those remortgaging. This suggests to me that much of lenders' focus in 2024 will be on property changing hands rather than refinancing. With so many existing borrowers coming to the end of fixed rates, there is a big problem for Owner Occupiers Housing costs (OOH), a key inflationary figure. Mortgage providers will need to wake up to the problem at hand and price better for remortgage customers, softening the impending payment shock.
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Stephen PerkinsVerified
Managing Director at Yellow Brick Mortgages
Mortgage rates have been steadily dropping in recent months as inflation has cooled and that's likely the cause of the October rebound in mortgage approvals. But we're not out of the woods yet. Following the Autumn Statement, swap rates, which impact mortgage rates, ticked up slightly due to the increase in the National Living Wage, which markets believe may put upwards pressure on inflation again. The smart money is on the Bank of England holding again in December and then, by the time of the next decision in February, we will have a much clearer picture of the state of the economy and the direction of the inflation tide.
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Craig FishVerified
Director at Lodestone Mortgages
The rise in mortgage approvals in October almost certainly reflects the steady improvement in rates we've seen in recent months. But there are storm clouds ahead. On the mortgage front, 2024 is going to see political spin collide with harsh economic reality. The General Election will see the current administration peddle a multitude of positive news stories while, in the background, more than one million homeowners will be coming off ultra-low mortgage rates and onto significantly higher ones. Even though mortgage rates look set to continue their steady decline as lenders aim to write more business with gradually increasing numbers of first-time buyers and home movers, the UK economy is very fragile and consumers are not guaranteed to come out of their shells.
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Elliott CulleyVerified
Director at Switch Mortgage Finance
2024 has the potential to be a good year for mortgage holders after a year of turbulence and the green shoots may be evident in the uptick in mortgage approvals in October. There have been positive steps forward on the inflation front in recent months, which has seen rates slowly edge down. However, a lacklustre Autumn Statement and news of a 5% increase in energy prices have put the brakes on swap rates decreasing further. The economic forecast is fragile and any data that isn’t in line with forecasts can affect the mortgage market. We need the positive news to continue. It's no coincidence that falling mortgage rates help stimulate the market and bring buyers back to the table. Time also plays a huge factor as we are starting to acclimatise to the new normal in mortgage rates. If mortgage rates can go sub-4% then I predict a material uptick in demand.
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Charles Breen0
Founder at C B
Over the past couple of months, the number of mortgage enquiries from buyers has increased, with a lot of people aware that rates are coming down and keen to get themselves ready to purchase in the new year. That seems to be apparent based on the October uptick in mortgage approvals. All eyes are on the next meeting of the Monetary Policy Committee in December. If they raise interest rates, it will shatter the consumer confidence that has been slowly creeping back. Elbert Hubbard famously said, "To avoid criticism, do nothing, say nothing and be nothing”, and that's the advice the Bank of England should take in the next few months. They were slow to act initially over inflation but now they need to have a steady hand as experience fails to teach where there is no desire to learn.
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Ross McMillanVerified
Owner/Mortgage Advisor at Blue Fish Mortgage Solutions
For those people whose fixed rate deals are due to end in the coming months, the outlook remains daunting but is still much rosier than it's been for most of 2023. Buyer sentiment has become a lot more positive as most now believe that we are past the peak of the interest rate mountain and heading slowly down the other side. First-time buyers have never really gone away but appear to be particularly active right now laying foundations and making plans for their early 2024 home purchases. With an impending General Election, overall market activity is likely to slow due to this uncertainty, however lower interest rates and pent-up demand look set to start 2024 with gusto. Only a severe bout of negative inflation data in the upcoming weeks could potentially derail this upbeat outlook and an overall positive end to 2023.
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Aaron StruttVerified
Product and Communications Director at Trinity Financial
The governor of the Bank of England has consistently said that he will do anything to bring down inflation and he really isn't joking. The economy is clearly in a mess and a large part of this is because of high rates. During the mini-Budget, it was pretty clear the Bank of England and the Government were not communicating. Mortgage rates have come down but they need to be lower to stimulate demand, probably closer to 4%. We are still speaking to lots of first-time buyers and increasingly borrowers looking to remortgage, as well as divorcing couples.
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Kundan BhaduriVerified
Property Developer and Portfolio Landlord at The Kushman Group
As long-term, responsible landlords, our collective responsibility is not only to our individual properties but also to the well-being of our tenants and the PRS ecosystem. It is evident that, historically, reduced mortgage rates stimulate demand. As the cost of borrowing diminishes, aspiring homeowners are emboldened to leap into ownership. The Treasury must advocate for policies that promote a symbiotic relationship between landlords and tenants, recognising the intertwined roles that landlords and tenants share. Remember, landlords need tenants and tenants need landlords. The government and lobby groups must champion initiatives that facilitate responsible homeownership without compromising the vitality of the private rented sector. This is not a battle between landlords and aspiring homeowners. tenant advocacy is essential for a robust private rented sector and the rise of lobby groups that adopt an adversarial stance toward landlords isn't helping either.
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Rhys SchofieldVerified
Brand Director at Peak Mortgages and Protection
Here on the ground of the economy, the housing market is ticking along steadily despite the fact that the silly season is nearly upon us. That there are so many property sales being tied up bodes well for 2024. Rumours that the mortgage market is dead have no grounding in reality.
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Graham CoxVerified
Director at Bridging Hub
Demand is only likely to pick up significantly when most mortgage rates are less than 4.5 percent in my opinion. Until then, the market will just tick over at subdued volumes. That said, it wouldn't surprise me if the Bank of England cut the base rate by March/April. They are predicting a much later cut, but given it was only a year ago they forecast the worst recession in 100 years, I don't have much faith they're right on this either.
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James Bull0
Mortgage Broker at JB Mortgages
The buy-to-let purchase market remains weak as high mortgage rates mean buyers need to put larger deposits down to meet lender affordability. Mortgage rates have dropped slightly over the past couple of months but are still high, so the purchase market in general is lower than usual. I suspect a few people may have been waiting for rates and house prices to drop, but as there is no sign of this happening those who have waited may feel it is time to jump in now.
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Austyn JohnsonVerified
Founder at Mortgages For Actors
Rates are pretty good and steady at the moment, we can comfortably quote a figure and next week it's pretty much the same. That is what clients need, stability. 2024 is going to see some major changes in the BTL industry, with many landlords turning to BTL LTD SPV lending due to tax etc. For resi, I think we may see a flurry of lower-value properties being snatched up due to landlords offloading properties that cannot be improved for profit or EPC.