Net mortgage approvals experienced a fall over the month of July, research from the Bank of England has revealed.
The research, Money and Credit - July 2023, discovered that mortgage approvals decreased from 54,600 in June to 49,400 in July.
This did not come as a surprise to some in the industry with Simply Lending chief operations officer, David White, stating that the data “confirms exactly what we're seeing on the ground.”
John Charcol mortgage technical manager, Nicolas Mendes, pointed out this was in line with market conditions.
He explained this was due to many potential first-time buyers and home movers opting to delay purchasing “in a period where mortgage rates had increased following stubborn inflation figures.”
Yellow Brick Mortgages managing director, Stephen Perkins, offered his own explanation saying: “The confidence to buy simply isn't there right now.”
The research also discovered that, at the same time, approvals for remortgaging slightly increased from 39,100 to 39,300 during the same period.
Mortgage borrowing
Additionally, the bank's research found that net borrowing of mortgage debt by individuals increased for the third consecutive month.
It discovered net borrowing of mortgage debt by individuals increased to £0.2bn in July, from £0.1bn in June.
Gross lending decreased from £20.4bn in June to £18.7bn in July, while gross repayments fell from £19.7bn to £19.1bn during the same period.
Additionally, the ‘effective’ interest rate - the actual rate paid - on newly drawn mortgages, was found to have rose by a further 3 basis points, to 4.66 per cent in July, while the rate on the outstanding stock of mortgages rose by 5 basis points to 2.97 per cent.
Household deposits
Elsewhere, the research showed that households had deposited an additional £0.4bn with banks and building societies.
This represented a fall on the £3.8bn on deposits in June.
The bank stated that this was mainly driven by net flows of £10.1bn into interest bearing-time deposit accounts, compared to £6.5bn in June.
Similarly, net flows into Isas also saw an increase to £4.3bn in July, from £2.9bn in June.
These increased inflows were mostly offset by net outflows of £10.2bn from interest-bearing sight deposit accounts, according to the research.
Households also withdrew a net £0.8bn from non-interest bearing sight accounts in July, following net deposits of £4.2bn in June.
The research additionally reported that households withdrew a net £0.1bn from National Savings and Investment accounts, compared to £0.2 billion of net withdrawals in June.
The combined net flow of both household deposits with banks and building societies and NS&I accounts amounted to £0.3bn in July, a significant decrease from £3.6bn in the previous month.
tom.dunstan@ft.com
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