In a third consecutive monthly decline, mortgage approvals reported by the Bank of England dipped significantly in September, hitting their lowest level since January. The number of home loans approved was 43,328, reflecting the impact of rising interest rates that have been implemented as an anti-inflation measure since December 2021.
This downward trend was also observed in remortgaging approvals which fell drastically to 20,600, marking their lowest point since January 1999. These shifts come amidst an ongoing cost of living crisis and concerns over a potential recession and unemployment spike.
Consumers' caution towards unsecured credit has resulted in a decrease in net borrowing to nearly £1.4bn in September from £1.7bn in August. Gary Bush from MortgageShop.com commented on these figures, emphasizing the weak sentiment in the housing market and the challenging market conditions. He pointed out the competition among lenders offering lower fixed rates and consumers' inability to switch lenders due to affordability reasons.
Despite easing inflationary pressures, the bank's rate remains at 5.25%, up from 0.1% in late 2021. The rate-setting meeting held off a hike to 5.5% in September, a position expected to continue despite warnings of a potential recession and fears of another crisis on the horizon due to the bank's aggressive interest rate push.
The Bank of England's rising interest rates have led to affordability concerns and pushed people to stick with their existing lenders. Financial adviser Gary Bush underscored the impact on the housing market as consumer caution over unsecured credit led to a fall in net borrowing.
Despite these challenges, October saw lower fixed rates due to lender competition, with hopes for no new crisis looming on the horizon.
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