Budget uncertainty appears not to be deterring homebuyers, according to Bank of England data, which shows that mortgage approvals increased in September.
There were 65,900 mortgage approvals for house purchases in September, the Bank’s latest Money and Credit report shows, an increase of 1,000 compared to the previous month. Gross mortgage lending rose from £23 billion in August to £24.9 billion in September, with gross repayments also increasing slightly to £20.3 billion, up from £20 billion in August.
The rising number of mortgage approvals for property purchases suggests that consumer confidence has not been dented by speculation that we could see changes to property taxes announced in the Budget on November 26. Recent months have seen calls for the Government to review stamp duty, which remains a significant affordability barrier for buyers. One Budget rumour is that the Treasury might be considering a new tax on the sale of homes worth more than £500,000 to replace stamp duty, with sellers rather than buyers made responsible for paying the tax. It’s important to remember, however, that this is just speculation.
Slight dip in remortgaging
Although mortgage approvals rose in September, remortgaging activity slowed slightly, with remortgaging approvals falling by 600, from 37,800 in August to 37,200 in September.
This could indicate that homeowners are choosing to stick with their current lenders, as the Bank of England data only captures those who’ve remortgaged with a different lender.
It might also suggest that some homeowners may be waiting to see if mortgage rates might reduce further in coming months before they remortgage. Mortgage rates have edged downwards in recent days, with Santander, Natwest and TSB having followed HSBC and Barclays in reducing some of their fixed rate mortgage deals ahead of the Budget.
Fixed mortgage rates tend to move even when there’s no change in the base rate, as they are more closely linked to swap rates, which are the rates that lenders must pay other financial institutions to acquire fixed funding for a set term.
All eyes will now be on the Budget next month to see whether any changes to property taxation could alter this momentum.
