It was bound to happen eventually, and as it turned out September would be the month where the markets saw a drop in mortgage approvals – the first one seen in several months.
A total of 44,489 mortgages were approved during September. This was 2,078 fewer approvals compared to the figure seen in August. According to the chief economist at the British Bankers’ Association, Richard Woolhouse, remortgaging has remained popular during recent weeks. Many people are clearly looking to get a good-value mortgage before interest rates start to rise. However it is still unclear when this is likely to happen. Remortgages dropped marginally as well in September, but it was only by a small amount – from 25,416 to 24,859, a drop of just 557.
However this figure turned out to be a full 40% higher than it was during September 2014 – a significant difference to note.
Is this drop something to be concerned about?
It may be concerning initially, when you look at August’s figures compared to September’s. However when compared to the situation a year ago things look very different indeed.
The British Bankers’ Association has confirmed that September’s figure still represents a rise of 14% on the level of approvals seen last year. This seems to indicate lots of people are still looking to get a mortgage while the interest rates remain low.
A “possibility, not a certainty”
This is the message given by Bank of England Governor Mark Carney with regard to the likelihood of a rise in interest rates. In reality no one is sure if or when the interest rates may start to rise. Perhaps this is partly why mortgage approvals dropped slightly in September. Perhaps people are realising that it may be fine to wait a little longer to be able to find the deal they want.
However, the uncertainty surrounding interest rates and the possibility of them rising is also no doubt driving many people’s decisions to search for affordable mortgage deals.
Remortgaging looks to be quite active at the moment though, as we have seen above. Those who already have a mortgage are comparing what they are paying to what they could be paying if they secured a better deal. Perhaps it’s the case that homeowners are more aware of how their monthly mortgage payments can change, when compared to those who do not have mortgages yet. There is certainly a lot of activity in the remortgage market compared to those looking for mortgages for the first time.
We can expect remortgages to remain steady then in terms of the figures for the foreseeable future at least. It remains to be seen whether the mortgage figures as a whole dip for a second month in a row, or whether they perk up again next time around. Given that the dip was reasonably small, it may just have been a blip. On the other hand it could be the beginning of something far more intriguing to come with regard to the mortgage market.