Bank of England mortgage approvals: "Wreck-It Reeves has put the brakes on the mortgage market"

October was surprisingly busy, as this data shows. The leaks ahead of the Budget incentivised many people to take action and get their home moves or remortgages done before things were potentially derailed. Which, sadly, they were. November has seen a material drop-off in mortgage demand as rates went north following the October 30th fiscal event. Before the Budget, there was the prospect of two rate cuts before the end of the year as inflation was sub-2%. But once the markets deemed the tax changes announced in the Budget to be inflationary, fixed rate mortgage pricing started to rise almost immediately, impacting demand. And with inflation subsequently rising to 2.3%, the December rate cut borrowers had been hoping for now appears completely off the table. There is still life in the mortgage and property markets, and the looming stamp duty deadline is driving a number of transactions, but things are nowhere as busy as they were and could have been.

Mortgage approvals for house purchases continued to rise ahead of the Budget as rates were competitive. Many people were also clearly to get their transactions sewn up before the 30th October as they were wary of what would be announced. They had every reason to be wary. The Budget has changed mortgage market sentiment considerably. During November, much of the momentum in the mortgagemarket has now gone and next month's figures are likely to relfect that. People's confidence has been popped. Transactions won't drop off a cliff due to the stamp duty deadline next year but things are now noticeably quieter as people digest the impact of the Budget on their finances.

The UK housing market has historically demonstrated remarkable resilience, and I expect this trend to continue. However, the challenges facing the economy are significant, and the strain is being felt across the board. With Rachel Reeves’ recent budget, there is a real risk of economic slowdown, which could weigh heavily on market activity. As we move into 2025, transaction levels are likely to remain subdued, driven primarily by those seeking to complete before the stamp duty deadline. While there may still be pockets of positivity, the broader market faces considerable pressure in the months ahead.

Mortgage approvals may have risen in October but the anxiety following the Budget has caused many people to pause their purchase plans until next year. With the Budget and changes to stamp duty looming things are looking shaky. The only good thing is that the Budget wasn't a repeat of Trussonomics.

Hordes of mortgage-hungry buyers are not easy to deter from pressing ahead with their plans. Whether out of desperation or desire, either way they continued to show themselves in their numbers before the Budget. Pre-budget panic would have stirred the higher activity, so I would expect to see a dip in November as the end of year lull in business feeds through. Activity for later life mortgages in October was very strong for us, seeing a near 30% increase month in month. With gilt yields increasing over the last month activity has taken a hit, so November is likely to be back to more normal levels for the time of year.

The October figures were as expected as borrowers rushed to submit applications ahead of the Budget, driven by predictions of its potential impact. In November, enquiries have decreased, possibly due to the Budget or the usual seasonal slowdown. The real impact will become clear in January 2025, once the festive season is over, and we see how many people include purchasing or moving house in their New Year’s resolutions.