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Bank of England mortgage approvals - September 2023

ended 29. October 2023

This morning, the Bank of England published its Money & Credit report for September, revealing mortgage approvals and net borrowing. 

Key points:

  • Net borrowing of mortgage debt by individuals decreased from £1.1 billion in August to -£0.9 billion in September. This was the lowest since April 2023 (-£1.3 billion). Gross lending fell from £19.4 billion in August to £18.6 billion in September, while gross repayments rose from £19.0 billion to £19.5 billion over the same period.
  • Net approvals (that is, approvals net of cancellations) for house purchases, which is an indicator of future borrowing, continued to fall from 45,400 in August to 43,300 in September, the lowest level since January 2023 (39,900). Net approvals for remortgaging (which only capture remortgaging with a different lender) continued to decline from 25,100 in August to 20,600 in September, the lowest level since January 1999 (18,300).

Newspage sought the views of brokers, below.

10 responses from the Newspage community

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Bob Singh
Founder at Chess Mortgages
These are extremely testing times for many people with a mortgage. Many borrowers have not experienced the rates of old and leaving a 1% or 2% and being faced with a 5% is daunting and stressful. No one expected rates to ever reach the levels they have, so many borrowers have also taken on unsecured debt because they could. Money was cheap and most of us were lured into a false sense of security. It’s not uncommon for people to spend all their disposable income and put little, if anything, aside for a rainy day. Lenders recognise this and are increasingly offering lower rate, higher fee options to soften the blow of an all-out increase in monthly payments that simply aren't affordable. Rather than seek advice, many borrowers will take the easy option and simply click to accept an option without often realising the consequences. The industry has much to learn to ensure the client returns to the original adviser who can then evaluate all options and offer an advised sale.
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Craig Fish
Director at Lodestone Mortgages
Purchase activity in September was extremely slow and so it comes as no surprise that the Bank of England data has confirmed this. The majority of our business has been product transfers, especially among our landlord clients. While we have seen a slight uptick in purchase business late in October, it's still way off where it would normally be. I suspect the remainder of the year will be equally as quiet despite lender rate reductions, and hope that 2024 starts in a way more positive manner than 2023 looks set to end.
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Simon Bridgland
Director at Charwin Private Clients
It is no surprise that more borrowers are sticking with their existing lenders in the form of product transfers, rather than seeking a new lender. The last year has seen personal debt increase significantly, meaning borrowers are less likely to meet a new lender's financial criteria and testing. Product transfers offer people an easy option with pretty good rates. Whilst September may have been subdued for purchases and remortgages, October has been more positive as reality hits borrowers that hyper low rates won’t be back so why wait any longer? The market looks set to plod along until the new year when I think buyers will return with vigour.
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Gary Bush
Financial Adviser at MortgageShop.com
These dire mortgage approval figures from the Bank of England were always on the cards. The sentiment surrounding the mortgage and property market isn't especially strong right now and these figures reflect that. The remortgage numbers highlight very clearly how many people have no choice but to stay with their existing lender due to affordability reasons. However, October has seen things pick up slightly, due to the lower fixed rates now on offer, as lenders compete for market share in a starved market. We are hoping, or rather praying, for no new crisis to appear on the horizon, whether economic, financial or fiscal, but it seems that one always manages to rear its ugly head. A calm end to 2023 is what's needed.
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Anil Mistry
Director and Mortgage Broker at RNR Mortgage Solutions
Though this data shows a mortgage market that is clearly under pressure, it does feel like many borrowers have acclimatised to the mortgage market we're now in. More people are now considering making a move while it's very much a buyer's market, but that sentiment hasn't translated into action yet. The reality is, there has not been a better time to be a buyer for many years. Yes, mortgage rates are now much higher than they have been for the past decade or more but they are gradually edging down as it feels like we may be at the peak of the interest rate cycle. House prices have also come down, which is starting to improve affordability and boost sentiment. Going against the grain, perhaps, we've been relatively busy since March, albeit with the usual slowdown during July and August due to the summer holidays. September was also fairly busy and while we expected October to be quieter, it has turned out to be pretty decent. Our firm has had its busiest eight months since we started.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Few brokers will be surprised by this data. There is a lot of tumbleweed blowing through the mortgage market at present. Mortgage applications for house purchase, and completions as a whole, were down in September and have continued to dwindle during October to date. The property market appears to have entered hibernation mode until the spring. However, there has been plenty of activity on the remortgage front as people seek to minimise the drastic increase in payments due to the skyrocketing base rate over the past 12 months. These figures show that many people are sticking with their existing lenders and in many cases that is because they have no other choice. The market won’t pick up substantially until the property market’s alarm clock goes off early in 2024.
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
So much for the seasonal pick-up. September was even worse than August and what little activity there was, involved people remortgaging. The fact remortgages are at a 24-year low underlines how exposed the average UK household is as people come off ultra-low rates. October, however, has seen a significant uptick in activity with a much healthier number of purchase enquiries and an increase in remortgages. It appears that people who have stalled on buying a home or moving due to interest rate volatility are all now coming forward, having had time to get acquainted with the new mortgage world we're now in. With house prices down, a sense of opportunism is creeping in despite higher lending costs. It is, after all, very much a buyer's market at present. If what we are seeing is reflective of the market as a whole, then, whisper it only, the property market may be starting to turn around.
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Elliott Culley
Director at Switch Mortgage Finance
September was quiet but October has certainly seen an uptick in activity levels. The main increase has been in purchase applications. With rates slowly edging down, buyers increasingly see these rates as not great, but at least affordable. If rates continue to reduce I would expect purchase activity to increase further. It seems that the shock of higher interest rates is starting to recede. Borrowers are starting to see current rates as the new normal and want to get on the mortgage ladder regardless.
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Jamie Thompson
Mortgage Broker at Jamie Thompson Mortgages
September saw a sharp dip in mortgage activity, leading me to think that would be the norm for some time. However, October saw a totally unexpected bounce-back, more than making up for September’s stupor. I think people have accepted that gone are the days of record low interest rates and they aren’t going to be coming back. I’m half expecting a little dip before the Autumn budget as people hang on to see if there is going to be another stamp duty holiday, which there probably will be. It’s almost there was a General Election approaching in the near future. But any stamp duty holiday will be yet another sticking plaster on a broken market.
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Ross McMillan
Owner/Mortgage Advisor at Blue Fish Mortgage Solutions
In Scotland, September activity was steady but largely remortgage-based whereas October has witnessed a discernible surge in enquiries from potential purchasers, specifically first-time buyers. It's no surprise, however, that a significant portion of these new enquiries are inclined to look at laying foundations for their mortgage and property plans next year rather than in the next couple of months. For some, this stems from a possibly incorrect belief that property prices and interest rates may reduce in the coming months. For most, it's simply a matter of timing and seasonality that is leading to a postponement of most house-buying endeavours, at least until the early part of 2024. Remortgage activity is less seasonal and largely consistent but even with rate competition hotting up between lenders, for a significant number of people, staying with their existing lender due to criteria or circumstances is often the right or only option available.