Mortgage approvals begin to dip as rates increase: BoE

This figure is also below the 12-month pre-pandemic average up to February 2020 of 66,700.

Approvals for remortgaging with a different lender decreased to 44,000, from 47,200 in May. This also remains below the 12-month pre-pandemic average up to February 2020 of 49,500.

Net borrowing of mortgage debt by individuals decreased to £5.3 billion, from £8.0 billion in May, although this remains above the pre-pandemic average of £4.3 billion.

Gross lending decreased to £25.4 billion in June from £28.1 billion in May, and gross repayments decreased slightly to £20.3 billion from £21.2 billion.

The data also shows that the average interest rate paid on newly drawn mortgages increased by 20 basis points to 2.15% in June.

Steve Seal, CEO od Bluestone Mortgages, commented: “With inflation reaching a 40-year high, it’s hardly surprising we’re seeing a dip in mortgage approvals. Add to this the cost of living crisis and the consequent strain on people’s personal finances, we expect a growing number of customers to be turned away from the mainstream mortgage market."

Paul Stockwell, chief commercial officer at Gatehouse Bank, said: “With the cost of living rising, record inflation and several months of consecutive interest rate hikes, it’s not surprising that the demand for mortgages has dipped. The short supply of homes and rising house prices over the last few years have also impacted property transactions as buyers look to delay purchases until market certainty returns.

“We are just concluding what is traditionally the busiest period for property purchases each year, and as mortgage market professionals and their clients go on holiday over the summer months, we would expect a slowdown in activity.

“It is also important to remember that year-on-year numbers are being compared to a period characterised by the Stamp Duty holiday, and appetite for purchase will naturally have seen a decline since this ended in June 2021.

“It’s key to stress that there is still a strong pipeline for future borrowing and we are gaining interest from new and existing borrowers despite the economic hurdles and supply issues. In the current climate, one marked shift has been a trend towards longer term fixes both for those looking for a mortgage or indeed to remortgage."