UK mortgage approvals look set to slump by 24% in 2023

UK mortgage approvals are expected to decline by 24% in 2023 compared to the previous year, research reveals.

According to a study by GetAgent.co.uk, the research analysed monthly mortgage approvals over the past five years and found that between January and October 2023, an average of 47,602 mortgages were approved per month.

The annual total would be 571,219 if that trend continued in the final two months of the year.

This marks the second consecutive year of significant decline in mortgage volumes, with a 20% drop between 2021 and 2022, from 937,093 to 752,1311.

‘2023 has been a difficult year for the property industry’

Colby Short, the co-founder and CEO of GetAgent, said: “There’s no getting around it, 2023 has been a difficult year for the property industry, as higher mortgage rates have dragged down people’s ability to buy.

“The one positive is the Bank of England has left the base rate unchanged since August 2023, which is helping people adjust to a new normal, as well as raising the potential for rate cuts in the new year.”

He added: “The market is likely to experience a recovery in 2024, though it surely won’t reach the heady heights of 2021, when the base rate was 0.10% and there was a stamp duty holiday for much of the year.”

Falling mortgage transactions have coincided with rate increases

The falling mortgage transactions have coincided with rate increases, as the Bank of England raised the base rate from 0.10% in December 2021 to 5.25% in August 2023, in a bid to combat double-digit inflation.

This has made mortgages more expensive, forcing many potential homeowners and landlords to delay their investing plans.

However, after the BoE’s decision to hold the base rate for a third consecutive time, the market is finally benefiting from some stability.

Cost of lenders’ funding is also falling

The cost of lenders’ funding is also falling, so mortgage rates could become more competitive entering 2024, reversing the trend witnessed over the past two years.

The firm also says that next year could be a better one than 2023, though it’s unlikely to reach the peak achieved in 2021.

Indeed, that year the market was heavily fired up by the government’s stamp duty holiday, with people rushing to buy before the reduced period ended.

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