Rising interest rates have led to a growing level of mortgage market instability
While a cooling housing market has led to fewer mortgage approvals, and, consequently, fewer mortgage cancellations, the proportion of mortgages being cancelled when compared to the number of approvals has risen to its highest level in the last 10 years, analysis of Bank of England (BoE) data has shown.
Sirius Property Finance has recently analysed mortgage approval data from the BoE, looking at the gross number of approvals and cancellations and how these have changed on an annual basis.
The research shows that some 891,990 mortgages were approved in 2022, an average of 74,333 per month – an 18.4% drop on the previous year, when gross approvals hit a 10-year high of almost 1.1 million. The number of approvals recorded in 2022 was also the lowest annual total since 2018.
Fewer mortgage approvals also led to a decline in mortgage cancellations, with 136,970 cancellations recorded in 2022, a drop of 13.8% on the previous year.
However, not only was this total number of cancellations the second highest in the last 10 years, Sirius Property Finance’s data analysis also revealed that it was the highest proportion when compared to total approvals seen in the last decade.
In fact, mortgage cancellations accounted for 13.3% of all gross mortgage approvals in 2022, up by 0.6% versus 2021, and the highest level of mortgage market instability seen since 2013.
“As interest rates have continued to climb, it’s not only had an impact on the appetite of the nation’s homebuyers, but it’s led to a growing level of mortgage market instability,” Nicholas Christofi (pictured), managing director at Sirius Property Finance, commented.
“While both the volume of mortgage approvals and cancellations have dropped, the number of cancellations as a proportion of mortgage approval market activity has actually climbed to its highest level in the last decade.
“This demonstrates the far trickier landscape buyers are having to negotiate when it comes to the higher cost of borrowing and the reluctance that many have had in following through with a mortgage offer as interest rates have risen.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, Twitter, and LinkedIn.
