- Impact of rising interest rates.
- Lowest mortgage approvals.
- Concerns over economic impact.
As the Bank of England planned its next borrowing costs position, rising interest rates had further effects.
Lowest Mortgage Approvals
The Bank of England reports that lenders approved the fewest number of mortgages since January last month.
In September, 43,328 home loans for single-family residences were approved, marking the third consecutive monthly decline.
Remortgaging net approvals dropped to 20,600, the fewest since January 1999.
The data illustrates the consequences of rising interest rates enforced by the Bank to combat inflation since December 2021.
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Consumers maintained caution towards unsecured credit due to the evolving cost of living crisis, according to separate data.
![Mortgage approvals hit january low, bank of england reports. Mortgage approvals hit january low, bank of england reports.](https://i0.wp.com/creativemedia.news/wp-content/uploads/2023/10/Mortgage.jpg?resize=800%2C600&ssl=1)
Last month, net borrowing decreased to just under £1.4 billion.
In August, the amount stood at £1.7 billion.
Concerns Over Economic Impact
The Bank raises mortgage interest rates to contain inflation, but it may cause an economic downturn.
In late 2021, the bank rate was 0.1 percent; it currently stands at 5.25 percent.
September marked the last time policymakers delayed a hike to 5.5%, and economists and financial markets anticipate this stance to be maintained at the rate-setting meeting this week.
All recent indicators suggest inflationary pressures will continue to ease in a flatlining economy, where the full impact of the rate rise cycle has yet to be felt.
For this reason, the Bank’s updated economic projections on Thursday will be scrutinized attentively.
The bank’s forecast of a recession may have lifted interest rates too much and produced an unnecessary rise in unemployment.
Housing Market’s Response
Gary Bush, a financial adviser at MortgageShop.com, commented on the impact on the housing market, stating, “These dismal mortgage approval figures from the Bank of England were inevitable”.
At this time, sentiment regarding the mortgage and real estate markets is not particularly positive, and these numbers reflect that.
“It is abundantly clear from the remortgage figures how many borrowers are compelled to remain with their current lender for reasons of affordability.”
“However, October has seen a slight improvement as lenders vie for market share in a saturated industry in response to the lower fixed rates that are currently available.”
“We are hoping, or more precisely, praying, that no new economic, financial, or fiscal crisis will materialize in the near future; however, it seems that one manages to rear its ugly head every time.” “What is required is a tranquil December 2023,” he concluded.
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