Mortgage approvals dropped to their lowest level in almost three years during May, Bank of England data shows.
Money and Credit data from the Bank of England shows mortgage approvals fell to 56,200, the lowest level since December 2023 and well below the six-month average of 63,300.
Net mortgage borrowing also dropped sharply to £2.9 billion, from £4.4 billion in April.
Commenting on the figures, Jason Tebb, president of OnTheMarket, com, says: “Approvals for house purchases, a useful measure of market activity as they indicate future borrowing, fell in May as ongoing political and economic uncertainty had an impact on buyer and seller decision-making.
IMPACT OF HIGHER MORTGAGE RATES
“With the effective interest rate on newly-drawn mortgages increasing to 4.22% in May, the impact of higher borrowing costs is also making itself felt. The continuing war in the Middle East, which has pushed up inflation and energy prices, has kept the cost of borrowing higher for longer. “
However, he suggested the Bank of England’s decision to hold base rate steady for four consecutive meetings will help steady concerns.
Tebb adds: “Lenders continue to ease mortgage rates, which should improve affordability in the months ahead for those committed to moving.”
