Mortgage approval figures have been closely watched since the vote for Brexit occurred back in June. Many were curious to see whether the outcome of the vote would have any effect on the housing market. The Bank of England has now published figures for August 2016, and they are confirmed as being at their lowest level since late-2014.
Still just above the 60,000 level
In July, a total of 60,925 mortgages were approved. This figure relates to house purchases only, and not to re-mortgages. This figure dropped by 867 in August, bringing the total for that month down to 60,058. The question now is whether it will drop lower and dip below 60,000 in September.
The last time figures were this low was back in November 2014. However, forecasts of a decline had been made, so the figure did not come as a shock. Indeed, some have estimated we could see an average monthly figure of around 56,000 mortgage approvals for the remainder of this year. So far, then, we have yet to dip anywhere near as low as that.
Also worth noting is the fact that mortgages for homebuyers have dropped a massive 20% year-on-year. This is perhaps to be expected, particularly when some people have been hesitant to buy their first property given the fallout over Brexit. Perhaps when the element of uncertainty disappears, people will be more confident of making such a big purchase.
What does the immediate future hold in store?
We are getting ever closer to the end of 2016, which has brought some experts to consider the likely outcome in the mortgage market in 2017. Some have speculated that house prices may take a nosedive next year. If so, this would be the first time since the recession that prices would take a step back.
Could this be a temporary glitch?
It could well be. Other figures released recently suggest unsecured borrowing is still growing. This is likely to point to a reasonable degree of confidence in the market and in the outcome of the Brexit vote. House purchases are a major investment, so while some are possibly hesitating to move, they are clearly not as concerned about the idea of spending money on the whole.
It could also be the case that some potential purchasers are waiting to see what happens to house prices. Some experts considered that we might see a drop in prices, but just recently surveyors have suggested that prices might actually go the other way.
Even though mortgages granted for house purchases have cooled slightly in recent times, enquiries about purchasing properties have been very healthy. Therefore, we could simply be seeing a small gap between those who are thinking of buying and those who actually are.
To this end, we could see some of those enquiries turning into mortgage applications and approvals in the coming months. If so, the next set of figures could be a little more encouraging when they are released.