UK mortgage approvals drop to lowest rate in five years

Mortgage approvals in the UK have dropped to their lowest level for five years, according to BBC News.

Figures from UK Finance indicate that just 36,115 seasonally-adjusted mortgages were approved in December 2017, the lowest figure since April 2013. The reduction took place despite a cut in stamp duty for first-time buyers which came into effect in November 2017.

Experts have said the stamp duty is unlikely to have made an impact in the figures, but some borrowers may have been deterred by the rise in interest rates to 0.5% by the Bank of England in November. This in turn led to an increase in rates on standard variable mortgages from December.

Dr Howard Archer, chief economic adviser to the EY Item Club said: “December’s marked drop in mortgage approvals suggests that already pressurised housing market activity took a further hit from the BAnk of England raising interest rates in early November. Housing market activity has been under pressure from squeezed consumer finances and fragile confidence.”

In December 2017 the amount approved by UK banks in mortgage lending was £7.02bn – the lowest since September 2016.