Mortgage approvals surged as homebuyers race to secure loans ahead of further rate hikes, the latest figures show.
The hike comes amid warnings that the “headwind” facing the already slowing housing market in the face of rising inflation and economic turmoil triggered by the prime minister’s mini-budget will intensify.
Kwasi Kwarteng’s borrowing tax cut plan has made the Bank of England more aggressive with interest rates, making it more likely that mortgage costs will rise.
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Many mortgage products have been withdrawn by lenders in response to uncertainty.
The industry also said the stamp duty cuts, which were unveiled as part of a package to boost home sales, “was erased by a subsequent tsunami of market volatility.”
According to the Bank of England’s monetary credit report, there were 74,300 mortgage approvals in August, up 16% from the previous month’s 63,700.
This is the highest level since 74,500 approvals were recorded in January and follows the slides from the previous month.
Samuel Tombs, UK chief economist at Pantheon Macroeconomics, said: “The sudden surge in home-buying mortgage approvals in August, the highest since January, is that people are ahead of mortgage rate hikes rather than fundamentally tightening mortgage rates. It seems to reflect the intention to secure a loan,” he said. demand.”
Almas Uddin, founding director of Revolution Brokers, said: “Despite mortgage rates being raised in response to numerous base rate hikes by the Bank of England, mortgage approvals have continued to surge in recent months.
“This has been triggered by a sense of urgency from domestic homebuyers eager to secure fairly affordable prices in anticipation of further increases this year.”
2:46 Prime Minister ‘following the plan’
Meanwhile, the Nationwide Building Society reported that house price growth in September was stagnant monthly, but real estate values were still 9.5% higher than a year ago on an annualized basis.
Real estate agents said there could be some renegotiations against the backdrop of rate hikes and could affect house prices if this becomes a trend.
According to Nationwide, the average house price in the UK in September was £272,259.
Read more:Financial watchdogs that provide mini-budget forecasts after a rare encounter with the PMB will be a bigger headache if it turns out that the totals of the awards don’t add up.
“In September, annual home price growth slowed to single digits for the first time since October of last year, but remained solid at 9.5%,” said Robert Gardner, chief economist at Nationwide.
“By lowering transaction costs, stamp duty cuts can support activity and prices to some extent, and the labor market will continue to be strong assuming unemployment remains at its lowest level since the early 1970s,” he added.
“But the headwinds are getting stronger, suggesting that the market will slow further in the coming months.
“High inflation is putting significant pressure on household budgets and consumer confidence is dropping to all-time lows.”
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Andrew Montlake, managing director of mortgage broker Coreco, said: “The era of double-digit growth may not come back for long.
“The level of uncertainty in the market and the level consumers feel are off the charts.
“The temporary surge in sentiment following Friday’s stamp duty announcement was later dispelled by a tsunami of market volatility.”
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