It’s not all doom & gloom - Mortgage approvals are up!
Mortgage approvals increased by over 3% from 49,000 in April to 50,500 in May, the latest Bank of England money and credit statistics show.
This comes despite the average rate on new mortgages increasing during the period. Even with rises in interest rates and inflation, approvals for remortgaging also rose from 32,500 to 33,600 during the same period – an increase of 3.38%.
Meanwhile, the stats show that individuals repaid, on net, £0.1bn of mortgage debt in May. This followed the record £1.5bn net repayments in April (if the period since the onset of the Covid-19 pandemic is excluded). The Bank of England’s monthly statistics show the amount of, and interest rates on, borrowing and deposits by households and businesses. They are used by the Bank’s policy committees to understand economic trends and developments in the UK banking system.
Commenting on these latest statistics, James King, Director of Mortgage Advice Bureau Kent said:
“Despite increases in the Bank of England base rate, the robustness of the market
has been shown with mortgage approvals rising from April to May. Rising rates,
though problematic in the short-term, will hopefully help to control inflation
throughout the second half of the year, reducing pressure on borrowers and seeing a
return of more consumer confidence.
The recent announcement of government measures to support existing mortgage
holders who may be struggling will help to alleviate some of the affordability pressure
in the market. Indeed, extending your borrowing period and moving from a
repayment mortgage to an interest-only product will reduce monthly payments but
fundamentally the debt will still need to be repaid. Overall the news is positive and
suggests the negative press coverage on this topic to be pure unfounded
speculation.
What does this mean for you and what should you do now?
The above shows that the mortgage market is still very active and lenders have plenty of money to lend despite higher interest rates.
Those most likely to feel the impact of higher interest rate are individuals who already have a mortgage and have been benefitting from lower priced mortgage products until this point.
What’s important now, is that you speak to a professional and ensure that if you’re on a fixed rate mortgage, you check when your deal comes to an end and contact a mortgage broker 6 months before your deal ends. If you’re on a tracker or SVR mortgage, we recommend getting in touch with a broker straight away so you don’t end up paying more than you need to.
A broker can advise whether it’s beneficial for you to switch to a different mortgage product, taking into account your personal circumstances. The main thing is, we don’t want you to pay more than you need to, and a quick phone call could help put your mind at ease.
Our in house mortgage broker works for the Mortgage Advice Bureau and can meet with you in our office or have a chat over the phone. Don't hesitate, contact the office ... we are here and ready to help in what ever way we can.