Net approvals for remortgaging fell by 4,500 over September to the lowest level seen since January 1999, data from the Bank of England has revealed.
The data, Money and Credit - September 2023, found that approvals fell from 25,100 in August to 20,600 in September, thereby reaching a 24-year low.
The bank’s research also found that net mortgage approvals for house purchases followed a similar trajectory, falling to 43,300 in September, the lowest level seen since the start of the year.
Net borrowing of mortgage debt by individuals was also found to have decreased over the month, falling from £1.1bn in August to -£0.9bn.
Additionally, gross lending fell from £19.4bn in August to £18.6bn in September, while gross repayments rose from £19bn to £19.5bn over the same period.
PEXA UK, chief executive officer, Joe Pepper, stated: “These figures continue to demonstrate relatively poor housing market sentiment as buyers, homeowners and lenders alike digest the impact of 14 consecutive interest rate hikes.
“And while it’s possible that we have seen rates peak, this weak data shows that we are far from out of the woods.
“What is clear is that this unprecedented interest rate spiral has compounded the cost-of-living crisis for hundreds of thousands of consumers.”
However, Pepper added there was “good news” as there has been a “flurry” of competitive repricing of fixed-rate deals in an attempt to stir activity.
He explained this is likely to help stimulate remortgage activity.
“Looking ahead however, as we do see mortgage rates fall back, it’s important that the mortgage market is equipped to handle the demand it will see as consumers seek to pare back their outgoings,” he cautioned.
“With consumer outcomes front of mind for the regulator too, that will involve creating a simpler, faster and more manageable remortgage and conveyancing process.”
Withdrawals and deposits
Households withdrew £0.7bn from banks and building societies in September, continuing the trend from August.
The research attributed this to net outflows from interest-bearing and non-interest bearing sight deposit accounts being £6.2bn and £2.8bn respectively, following outflows of £6.1bn and £6bn in August.
These were partly offset by net inflows into interest-bearing time deposit accounts, which fell from £8bn in August to £5.3bn in September.
tom.dunstan@ft.com
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