Mortgage approvals firm in March as mortgage rates rise

The Bank of England released the mortgage approval data for March 2022 this morning.

What they said

Mortgage approvals for March 2022 were 70,691

This was 0.4% lower than the 70,968 mortgages approved in February 2022

This was 14.5% lower than the 82,717 mortgages approved during March 2021

Twindig take

Mortgage approvals were just 277 fewer in March 2022 than in February 2022, and March's approvals are 7% ahead of the ten year average of 66,810. The mortgage market, and therefore by proxy the UK housing market, remains in fine fettle.

Rising mortgage rates and rising living costs have yet to dampen homebuyers' homebuying appetites. Whilst we might only be at the foothills of the inflation and mortgage rate ascendancy, there has been no knee jerk reaction to the threat of rising costs. This is a good sign because as we can see in the graph above, the level of mortgage approvals can be volatile if something spooks the housing market. Perhaps because asset prices tend to rise during a period of inflation, and houses are a rather prized asset.

If house prices continue to rise the housing finance cycle suggests that mortgage lending will follow suit, as house prices rise lenders have a bigger (more valuable) asset on which to secure future lending.

Mortgage rates are rising and the leap in rates during March was significant in relative terms with average fixed and floating rates for new business increasing by around 10%. However, in absolute terms, mortgage rates remain very low in a broader historical context and, therefore, even though mortgage rates are rising, there are some attractive mortgage deals to be done.