Mortgage approvals – A year in review

Mortgage approvals play a pivotal role in anticipating the trends within the residential sales arena, typically leading the way by approximately three months. Consequently, keeping a close watch on mortgage approvals is crucial for gaining valuable insights into forthcoming market activity.

Since the dawn of 2023, there has been a noticeable uptick in the number of approvals, though it still lingers below the usual benchmarks. Throughout the year leading up to July, the monthly average for approvals stood at 51,600, representing a 21% deviation from the levels observed during the seven years preceding the Covid-19 pandemic.

While inflationary pressures continue to exert their influence, there is a glimmer of optimism in recent inflation data. Projections indicate that interest rates are on track to reach their peak in the current year, with a subsequent decline expected to commence in 2024. Any resurgence in market activity is poised to manifest first and foremost through the lens of mortgage approvals.

It’s worth noting that mortgage approvals hit their lowest point in December 2022 and January 2023. This downturn can be attributed in part to seasonal factors, but it was primarily driven by reactions to the uncertainties surrounding inflation and interest rates.

Source: Dataloft, Bank of England

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