Mortgage Approvals Down By 20%
Volatile market settings and rising living costs pushed average mortgage approvals down by 20% in 2022.
Market settings changed significantly in 2022 as mortgage rates and living costs spiked, especially in late 2022. As a result, the average number of mortgage approvals decreased by 20% in 2022, year-on-year.
In turn, remortgage approvals have soared as existing buyers started reconsidering their budgets and available mortgage products to secure favourable deals.
Mortgage Market Settings
One of the main reasons behind falling mortgage approvals is buyers putting their homeownership plans on hold because of rising living costs.
At the same time, existing homeowners start to remortgage to secure favourable rates before any potential interest spikes.
Unsurprisingly, the total value of property purchase approvals decreased from £208bn in 2021 to £176bn in 2022, a 15.3% drop. Similar figures for remortgaging approvals increased from £92bn to £113bn, representing a
22% spike.
However, the average values of each individual approval have increased by 6.2%, from £219k in 2021 to £233k in 2022. This trend shows that the number of buyers entering the property market has fallen, but those who proceed with the purchases borrow more to counter the rising living costs.
Average values of remortgaging approval have also jumped by 4.6% in 2022.
Industry Says
Most property experts confirm rising property values and falling mortgage approvals in 2022. Many buyers decided to put their homeownership plans on hold because of changing market settings and increasing mortgage rates, which is justified.
However, mortgage rates have been sliding down since December 2022, and many expect to see this trend continue throughout 2023 as lenders readjust their rates. As a result, the spring and summer property market is set to perform better than previously expected.
