Mortgage approvals

UK Mortgage approvals are the key leading housing market indicator, in our view. A mortgage approval today typically leads to a housing transition in three months time. October was an important month for UK mortgage approvals as it marked the first set of data we have had since the end of the stamp duty holiday. Mortgage approvals fell, as they were expected to, but not by as much as we may have thought.

 

Latest UK Mortgage approvals

Key UK mortgage approval statistics and figures:

 

Chart of recent UK mortgage approvals

UK mortgage approvals twindig anthony codling

The data for this chart can be found at the end of this article

 

 

UK mortgage approval commentary

Mortgage approvals in May 2022 were 66,163, which was more than 23% below their level a year ago (86,388), and 0.4% below their ten-year average of 66,426. Whilst mortgage approvals remain firm and in line with longer erm trends it is likely, in our view, that rising mortgage rates and rising living costs will start to dampen homebuyers' homebuying appetites. Whilst we might only be at the foothills of the inflation and mortgage rate ascendancy, these cost increases are starting to bite. Whilst there is nothing to worry about yet, we are starting to see the UK housing market starting to cool a little. 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   

 

Chart of long term UK Mortgage approvals

 

Chart UK mortgage approvals long run twindig anthony codling bank of england

 

Credit Conditions Survey 

The latest Bank of England Credit Conditions survey (14 Apr 22) reported that lenders are expecting the supply of mortgages to reduce in the next three months. This is the first time mortgage supply has been expected to reduce since Q3 2020. No doubt the increased costs of living and rising trajectory of bank rate are on lender's minds. The majority of house purchases are funded by a mortgage and as we saw during the Credit Crunch the supply of mortgages is critical to the overall health of the housing market. Whilst the COVID-19 pandemic did little damage to the housing market a reduction in mortgage supply, if significant, could knock it for six. We often say that the mortgage approvals data is the key lead indicator for the UK housing market and we will be watching the mortgage approval data with eagle eyes to see if they indicate any problems ahead.

 

Future publication dates for UK Mortgage approvals

 

 

UK Mortgage approval data since January 2018

Date    Mortgage Approvals ('000)
Jan 18 66.9
Feb 18 64.0
Mar 18 63.6
Apr 18 63.6
May 18 65.0
Jun 18 65.6
Jul 18 64.9
Aug 18 66.2
Sep 18 65.6
Oct 18 67.1
Nov 18 64.5
Dec 18 64.3
Jan 19 65.9
Feb 19 65.3
Mar 19 62.6
Apr 19 66.7
May 19 66.1
Jun 19 67.1
Jul 19 68.7
Aug 19 67.6
Sep 19 66.6
Oct 19 64.6
Nov 19 64.4
Dec 19 66.0
Jan 20 69.3
Feb 20 72.9
Mar 20 56.7
Apr 20 15.8
May 20 9.3
Jun 20 40.5
Jul 20 68.2
Aug 20 86.7
Sep 20 92.7
Oct 20 98.7
Nov 20 104.5
Dec 20 101.6
Jan 21 97.5
Feb 21 87.4
Mar 21 82.6
Apr 21 85.3
May 21 86.0
June 21 79.9
July 21 75.5
August 21 73.5
September 21 71.9
October 21 67.4
November 21 67.7
December 21 70.3
January 22 73.3
February 22 70.3
March 22 69.6
April 22 66.0
May 22 66.2

Source: Bank of England

Bank of England Statistical Tables