Approvals hit by continued weakness in remortgage market

Approvals fell 5.8 per cent year-on-year on a seasonally-adjusted basis in August due to continuing weakness in remortgaging and further advances, new data from the Bank of England shows.

The total number of approvals fell from 112,825 in August last year to 106,290 last month. Despite a declining in the number of approvals, the value of approved mortgages rose 2.5 per cent from £15.8bn in August 2013 to £16.2bn last month.

The remortgage continues with approvals down 10.6 per cent from 36,118 in August last year to 32,273 last month, with the value of these loans falling 7.2 per cent from £5.5bn to £5.1bn.

Purchase approvals totalled 64,212 in August, 0.9 per cent higher than the 63,608 approvals for purchase 12 months earlier. In value terms, purchase approvals reached £10.4bn representing a 7.2 per cent increase from £9.7bn in August 2013.

Loans for other purposes saw the biggest decline in terms of volume, at 9,804 approvals, representing a 25 per cent decrease from the previous year’s 13,099. In value terms, approvals for other purpose remained unchanged, at £600m.

SPF Private Clients chief executive Mark Harris says: “One would expect the mortgage market to slow down in August as it is traditionally a quiet time of year.

“With Mark Carney stating last week that the first interest rate rise is getting closer, borrowers should not be complacent about low interest rates. While the Governor of the Bank of England pledged that increases would be ‘limited and gradual’ borrowers must still plan ahead and ensure they can afford their mortgage now – and in the future. Five-year fixed rates in particular are good value and provide certainty for the medium-term.”