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UK’s Mortgage Approvals: A 2024 Expert Commentary

What does Mortgage Approval research show?

UK Mortgage approvals have experienced a sharp decline over the last few months*.

Trading Economics 2023 data showed that “Net approvals for house purchases in the United Kingdom decreased to 49,400 in July 2023, down from June's final figure of 54,600. This ultimately fell short of market expectations of 51,000 approvals."

What do Mortgage Experts think?

We asked a number of industry experts a series of questions around Mortgage Approvals, buyer behaviour and future predictions.

Do you forecast an uplift in UK Mortgage Approvals within the next 12 months?

Despite the ongoing market uncertainty, there seems to be a clearer understanding as to what will become the ‘new normal’ (in terms of interest rates) from now, compared to 12 months ago. Opinions differ but, fluctuating market conditions suggest a more bearish than bullish outlook.

I would say the opposite. I think the real issue we are starting to see is not only issues for applicants but issues where valuers are concerned. Clients are having offers accepted on what appears to be fair market conditions, but the surveyors going out and valuing properties on behalf of lenders are being extremely cautious, with no sign of this slowing down, and quite often this means buyers are needing to either find extra cash which isn’t available or attempting to renegotiate the price, which is particularly difficult right now.
Ben Grey
I believe there is a massive level of uncertainty from clients looking to purchase, especially in the first time buyer market. Not only do they need a large deposit to consider purchasing, but the interest rates are certainly weighing heavy on people’s decisions to jump on the housing market. For the average employed clients who have a fixed level of income each month. Purchase applications are down for my firm by approximately 60% currently. Once inflation has not only reduced to the lower levels the government want, but stabilised, I feel that we will see a return to a stronger level of approvals.
I do, yes. We are in a period now where people have accepted slightly higher rates. I don't think we will see the rates of 0.85% - 1.5%, for a long time. There is a lot of stock on the market at the moment with BTL landlords selling off some of their portfolios so a great chance for first time buyers to get on the ladder.
Mark Hansard

Have you spotted any Mortgage Approval patterns across specific regions?

We’re seeing regions across the country experience drastic differences in house price behaviour, one of the leading influential factors in mortgage approval rates.

National Statistics lates regional data for England indicates that:

  • Yorkshire and the Humber experienced the greatest monthly rise with a movement of 1.5%
  • the East Midlands saw the lowest monthly price growth, with a fall of -0.5%
  • the North East experienced the greatest annual price rise, up by 2.7%
  • the South West saw the lowest annual price growth, with a fall of -1.0%
I would not necessarily say this is region based, but I am certainly finding those areas whereby house prices have been slightly inflated over the past few years are having stricter valuations placed upon them, which is your higher value areas.
Ben Grey

Have you spotted any Mortgage Approval patterns based on property type?

On average, Semi-Detached houses have historically been the most popular property-type across the country. In regions like London, however, flats and maisonettes tend to be the most common. Contrasting this is the South West, where historically the most common property-type are detached houses.

Of the transactions we have done, more people do appear to be turning to flats than houses.
There is still an issue around some flats that require an EWS1 form, which is the fire safety cladding certificate. Although some lenders will accept a remedial scheme certificate, if the lender's surveyor is adamant on an EWS1 form, there is no way around it, currently.
Mark Hansard
I am currently seeing a real issue with anything out of the ordinary where property types are concerned, even down to issues with ground rent figures on apartments. Valuers on properties where ground rent is above the average have previously been absolutely fine with this and it was fairly easy to get a mortgage through on this basis, whereas recently any increases in ground rent or anything slightly ‘out of the ordinary’ is being scrutinised significantly.
Ben Grey

Have you spotted any Mortgage Approval patterns based on first-time or second-time buyers?

In 2022, there was an 11% annual drop in First-Time Buyers purchasing a home across the UK. All regions across the country experienced drops in First-Time Buyers with South East, South West, Wales and Northern Ireland all seeing a decline of 12%.

Of the approvals we have done, more are of first time buyers than second home movers. I feel that those currently with ownership are wary of the big next step up. Doubling their mortgages and a time when rates are also doubling from what they are used to playing hard on 2nd time movers.
Lenders are adapting and amending criteria's to help clients. Some lenders offer an increased income multiple if earnings are over a certain amount and some lenders are increasing how much clients can put on interest only, if there is a suitable repayment vehicle in place. I don't think it's a bad thing if first time buyers are getting used to rates between 3%-4.5%.
Mark Hansard
There hasn’t been a significant trend in relation to this, but what I will say is I am seeing more scrutiny and documents requested for First time buyers at higher Loan to Values. Typically you see higher loan to values in first time buyers as second time buyers have already built up some equity for the deposit on the next home, but where there is a smaller deposit there is far more scrutiny being placed on these types of applications. As long as a good broker is being used and work being done upfront to check criteria ahead of application, this isn’t necessarily causing issues with approvals.
Ben Grey

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