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 October 2021 were 67,199 more than 30% below their level a year ago (98,678), but were 2.7% above their ten-year average of 65,400. Falling mortgage approvals is not a big surprise following the end of the stamp duty holiday. We would expect a lull in mortgage approvals for the rest of the year, before picking up again in the spring selling season. However, the recent discovery of the Omicron COVID-19 variant may cause the housing market (and therefore the mortgage market) to pause for breath whilst the extent of the new risks posed by the variant are assessed and calculated. The Stamp Duty Holiday was extended from 31 March 2021 to 30 June 2021 with a further, although less generous extension from 1 July 2021 to 30 September 2021. The Stamp Duty holiday now applies to homes costing up to £250,000 rather than up to £500,000. However, the average house price in the UK is less than £250,000 according to the Nationwide Building Society, so plenty of homebuyers will still benefit from the Stamp Duty Holiday.   

 

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 Oct 21) reported some very interesting dynamics in the mortgage market. The supply of mortgages is expected to increase and the price of mortgages (mortgage rates) continue to decrease in the coming months, which should stimulate demand. However, demand for house purchase mortgages is expected to decrease as the stamp duty holiday draws to a close, although remortgaging activity is expected to pick up as homeowners seek to lock in low mortgage rates before they start to rise. We may therefore start to see the housing market slow down as the wider economy opens up.

 

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 67.2

Source: Bank of England

Bank of England Statistical Tables