Mortgage approvals hit 19-month low

Lenders approved the lowest number of mortgages since May 2020 in December.

The latest Bank of England data shows mortgage approvals for home purchases decreased from 46,186 in November 2022 to 35,612 in December, the fourth consecutive monthly decline.

Commentators suggest this reflects the uncertainty and disruption in the mortgage markets at the end of the year.

Lucian Cook, head of residential research at Savills, said:  “Together with other lead indicators, these mortgage approvals suggest it will be a price-sensitive, low-transaction market, that is dominated by needs based buyers and weighted to those with a decent chunk of housing equity behind them.

“This will favour the prime housing markets, which are expected to see smaller price falls and a stronger recovery than their mainstream counterparts, due to less reliance on mortgage debt.”

Cook said Savills’ analysis of data coming out of Twenty CI suggests whole market activity in January will be 22% below the pre-pandemic norm, having been 24% above the same benchmark two years ago.

He said this will translate into slower house price growth, after two years of record rises, adding: “This will require pragmatism on the part of both buyers and sellers when negotiating a transaction.”

Simon Gammon, managing partner at Knight Frank Finance, added: "The traditional property market Christmas slowdown came early in 2022 as prospective buyers opted not to act during the chaotic weeks after the mini-budget. Mortgage approvals for house purchase reveal just how poor sentiment was during the period.

"January has been much more active, which will show in next month's data. It is clear now that many buyers' merely postponed house moves rather than cancelled them altogether. 

"Mortgage rates eased during December. That has been the primary driver in the change of sentiment and rates have continued to decline through January, albeit slowly.”