UK mortgage approvals fall to lowest since June 2020 as housing market cools
The number of mortgages approved by UK lenders fell by 10% last month, after Kwasi Kwarteng’s mini-budget roiled markets.
Mortgage approvals for home purchases fell to 59,000 in October from 66,000 in September, new data bank of england shows.
This is the lowest since June 2020, when the housing market was hit by the first wave of Covid-19, down from around 66,000 in September.
Some lenders withdrew their mortgage offers after the mini-budget, while others slashed the interest rate on their deals – which could make some buyers nervous.
simon gammonon the managing partner knight forthright financesay it shows borrow data Activity “markedly slow”.
Monthly mortgage approvals for home purchases are trending below the long-term average, which could be a sign of things to come. The mini-budget weighed heavily on sentiment and it is now clear that many buyers have opted to postpone acting until at least the other side of Christmas, but we would expect activity to subside until 2023 while borrowers digest that What is the “new normal” interest rate.
To lie Says market feels ‘very finely balanced’ after mini-budget turmoil ends:
Average mortgage rates rose during October amid the chaotic days following the mini-budget. Lenders started reducing rates recently after the Bank of England intervened and subsequently scrapped one of the government’s most controversial proposals.
“Those rate cuts will come through in the November data, but we probably won’t see much easing until the new year. The positive news is that things have stabilized, but the market still feels very balanced.
The bank also reports that consumers borrowed an extra £800m in consumer debt in October, as households tried to cope with rising food and energy bills.
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People are tapping their flexible savings accounts – probably to cover rising living costs – Stats Today bank of england performance.
myron jobson, Senior Personal Finance Analyst interactive investorsdug into the data and explains:
There was a significant increase in the amount of cash that can be deposited into fixed-term accounts, which usually offer more attractive savings rates with the trade-off of not being able to access your cash without penalty until the end of a specified term. .
“But this is offset by an outflow of £4.8 billion from ‘sight deposit’ accounts, the flexible savings account allowing savers to make withdrawals without notice. This suggests that more and more people are raiding easily accessible savings.” Being forced to kill so that they can get help amidst the crisis of livelihood.
UK mortgage approvals fell last month Next year is a prelude to home price correction, predicts Sam Mileysenior economist cebr think tank:
The effects of tighter monetary policy are also beginning to be reflected in the housing market, with mortgage approvals and net mortgage lending both showing sharp declines in October.
Cebr expects this trend to continue and home pricing to improve in 2023.
Germany’s economy minister vows to protect industry
In Berlin, Germany’s economy minister has insisted the government will protect its industrial sector, as it is hit by a slowing economy and rising energy prices.
Robert Habeck told an industry conference that Germany would not give up its status as an industrial nation, saying:
“Anyone who believes that we will ruin Germany as a place for industry has not done the math with German industry.
His comments follow concerns that industrial jobs could go overseas if Germany slips into recession.
Germany’s ambassador to Britain, meanwhile, is concerned that trade between the two countries has steadily decreased since the Brexit referendum. UK drops out of Germany’s top 10 trading partners,
The UK 🇬🇧 is Germany’s third export market, but we are concerned that there has been a steady decline in trade between 🇬🇧🇩🇪 since the Brexit referendum.
Britain has traditionally been Germany’s fifth largest trading partner. The UK will drop out of the 🇬🇧 Top 10 list in 2022 (blue line) pic.twitter.com/llyyM1IJAj
– Miguel Berger (@GermanAmbUK) November 29, 2022
Quilter: The UK housing market is weakening
The UK housing market is on the verge of a significant downturn, if not a crash, warns mortgage expert Karen Noy at Quilter:
latest figures show Mortgage approvals for home purchases fell to 59,000 in October, down from 66,000 in September.
“This latest drop suggests that demand is starting to come out of the market, and may come at a time where more people are starting to consider selling their properties as a result of unaffordable mortgages and heating costs.
The cost of living crisis could further weaken the market, says Noe:
As we move into winter and the temperatures drop, increased energy bills as well as very high mortgage payments may result in more people being unable to live in their current homes.
If this is the case – and demand levels continue to decline – we will likely see a subsequent reduction in house prices and a shift from a seller’s market to a buyer’s market in recent years.
The Bank of England’s Money and Credit Report also shows the impact of higher interest rates on savers and borrowers.
The “effective” interest rate – the actual interest rate paid – on new UK mortgages rose 25 basis points to 3.09% in October, as mortgage costs rose.
On the other hand, the effective interest rate paid on deposits with banks and building societies increased:
One of the positives from higher UK interest rates is better returns for savers.
Bank of England: The effective interest rate on fresh fixed deposits of individuals in banks and building societies rose to 3.26% in October from 2.49% in September.— Sean Richards (@notayesmansecon) November 29, 2022
Sizewell Sea nuclear plant confirmed with £700m public stake
The UK government has confirmed that the new Sizewell Sea nuclear power plant in Suffolk will go ahead with a £700 million stake, supporting the plan.
Under the plan, Britain would become a 50% shareholder in the Sizewell C nuclear project under an agreement with its owner, EDF.
This would allow them to buy out China General Nuclear (CGN), a Chinese backer, and (the ministers hope) attract new investment to the project.
The £700m stake is the first government backing for a UK nuclear project in more than 30 years
Ministers said this step First announced at Jeremy Hunt’s Autumn Statementwill create 10,000 highly skilled jobs, provide reliable low-carbon electricity equivalent to 6m homes for over 50 years and help secure the UK’s energy security.
The government also said it would set up an arm’s length entity, Great British Nuclear, to develop a pipeline of nuclear projects beyond Sizewell Sea.
His full story is:
Higher interest rates also cooled the UK housing market last month, turning down mortgage applications,
The Bank of England’s base rate is now 3%, up from 0.1% a year ago – and is expected to rise to 4.5% by next summer.
Ashley Webb of Capital EconomicsJoe expects a 12% peak-to-trough drop in home prices, predicting the downturn will be even worse:
Overall, with high inflation and further rate hikes (3.00% to 4.50% now) set to further tighten the finances of households and reduce credit demand, we expect housing market activity to accelerate from here. will fall and real GDP will decline by 2% during a recession.
The value of mortgage lending within the UK has also fallen to its lowest level in almost a year.
Net borrowing of mortgage loans by individuals fell to less than £4.0bn from £5.9bn in October, the lowest reading since November 2021.
UK mortgage approvals fell sharply last month The latest signs are that the housing market and the broader economy are slowing.
Karim Haji, head of financial services in the UK kpmgThey say:
This isn’t hugely surprising, being a combination of high rates attached to products on the market, which have made them less affordable for many, and a reluctance among consumers to make huge new financial commitments in such a gloomy climate. Careful about.