Mortgage approvals predicted to drop by 13% for residential property purchases

Octane Capital expects the total level of UK mortgage approvals to be 1.570 million by the end of 2022. That is an average of 130,764 per month. 

Compared to 2021 this level of total market activity would be a -0.2% drop. Comparisons based on the type of mortgage approval were made to identify the sub-sector driving this decline. 

It is estimated that mortgage approvals for residential house purchases specifically will drop to 818,641 (-13.4%) in 2022.

Mortgage approvals for individuals who remortgage are set to climb by 24% on an annual basis, with existing borrowers increasing the size of their current mortgage with the same lender expected to jump 7.6% compared to 2021. 

The total level of mortgage approvals seen across the UK is set to remain 2.8% higher than five years ago. 

House purchases are predicted to drive the dip in 2022, while the annual total also remains 2.6% higher when compared to five years ago. 

Chief executive officer of Octane Capital, Jonathan Samuels, commented: “We predict that 2022 will see a very marginal decline in topline mortgage approvals and, at first glance, this suggests that the sector will have weathered the rather ferocious storm that has broken in recent weeks.”

“However, when dissecting the market by type of mortgage approval, it’s clear that the damage done to the residential market has been far more pronounced.”

“In fact, we expect to see mortgage approvals for house purchases take a notable dip come the end of this year. This is due to the recent turbulence seen across the mortgage market, with growing uncertainty and an increased cost of borrowing deterring many buyers from progressing with their purchasing plans.”

“At the same time, we’ve seen many existing homeowners rush to remortgage in order to secure a favourable rate before any further increases materialise, as well as an uplift in those borrowing more on their existing mortgage, with both areas of the market bringing a degree of stability where total mortgage approval levels are concerned.”