Mortgage approvals drop dramatically as market hits ‘tipping point’ after stamp duty holiday
Mortgage approvals for house purchase dropped sharply after the end of the stamp duty holiday, the Bank of England said.
Mortgage approvals for house purchase dropped down to 67,200 in October from 71,900 in September, close to the 12-month average up to February 2020 of 66,700.
However, approvals in October remained above the pre-Covid averages for 2018 (65,049) and 2019 (65,715).
Net borrowing of mortgage debt by individuals amounted to £1.6bn in October, the lowest since July 2021, fresh data revealed on Monday.
Property experts said the figures came as no surprise and was a sign of the housing market returning to a calmer pace.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said the figures demonstrated a “tipping point” for the market “as the impact of the stamp duty holiday and the number of brought forward purchases was laid bare.”
Leaf added: “Nevertheless, we have found at the sharp end there are still many trying to take advantage of low interest rates before their seemingly inevitable increase and buy houses rather than flats which are still lagging behind in the popularity stakes, particularly those without outside space.”
The estate agent said he was not predicting “too much change” but expected the bounce back in listings between December and January “to be stronger than usual as buyers and sellers come to terms with the new normal.”
The figure’s were “comforting” and suggested the market was returning to normal after a “very hectic” stamp duty holiday-inspired period, according to Anthony Codling, CEO of property platform Twindig.
Mortgage approvals being slightly ahead of their 10-year average in October suggested that the market was “long way away from the cliff edge,” Codling added.
Managing director of Sirius Property Finance, Nicholas Christofi, said the figures “certainly aren’t a reason to panic.”
He added: “While an increase in rates is likely to materialise early next year, the cost of borrowing will remain very low and so we don’t anticipate any significant drop in buyer demand as a result.”