# UK mortgage approvals hit lowest since June 2020
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-11-29
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: UK Mortgage Approvals Hit Lowest Level Since June 2020 Amid
Meta Description: Housing market slowdown: Mortgages approved in Britain at lowest since pandemic. BoE data shows decline in house prices and mortgage lending, signalling caution
URL: https://financedigest.com/uk-mortgage-approvals-hit-lowest-since-june-2020html

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By Andy Bruce

LONDON (Reuters) -The number of mortgages approved by lenders in Britain fell in October to its lowest since June 2020, soon after the onset of the COVID-19 pandemic, according to Bank of England data on Tuesday that underscores a sharp housing slowdown under way.

Lenders approved 58,977 mortgages for house purchase last month, down from 65,967 in September. A [Reuters poll](https://www.financedigest.com/bank-of-england-to-raise-rates-by-50bps-again-to-tame-inflation-reuters-poll.html "Bank of England to raise rates by 50bps again to tame inflation: Reuters Poll") of economists had pointed to approvals of 60,200.

Britain’s housing market is showing clear signs of slowing, with various gauges of house [prices now showing cooling inflation](https://www.financedigest.com/uk-shop-price-inflation-hits-record-8-in-january-brc.html "UK shop price inflation hits record 8% in January: BRC") after rapid growth during the pandemic.

A Reuters poll of economists and [property market analysts last week showed house](https://www.financedigest.com/fractional-property-isnt-quite-as-safe-as-houses.html "Fractional property isn’t quite as safe as houses!") prices were forecast to drop around 5% next year, having risen about 24% since early 2020, according to official data.

Tuesday’s BoE data showed the net increase in mortgage lending in October was smaller than expected at 3.966 [billion pounds ($4.75 billion), down sharply from 5.878 billion pounds in September and marking](https://www.financedigest.com/spotify-listeners-cross-half-a-billion-mark.html "Spotify listeners cross half a billion mark") the lowest reading since November 2021.

Consumer borrowing increased in net terms by 769 million [pounds in October, picking up slightly from September’s 608 million pounds rise](https://www.financedigest.com/dollar-slips-after-upbeat-china-data-euro-pound-rise.html "Dollar slips after upbeat China data; euro, pound rise").

October’s money and credit figures reveal further signs that households continue to remain cautious and higher [interest rates](https://www.financedigest.com/ecbs-centeno-says-interest-rate-close-to-peaking-if-no-new-shocks.html "ECB’s Centeno says interest rate close to peaking if no new shocks") are starting to weigh on the economy,” Ashley Webb, UK economist at consultancy Capital Economics, said.

Mortgage interest [costs soared and many lenders temporarily stopped issuing loans after former Prime Minister Liz Truss’s unfunded package of tax cuts in September caused a fire](https://www.financedigest.com/indefensible-uks-sunak-under-fire-over-response-to-cost-of-living-crisis.html "‘Indefensible’: UK’s Sunak under fire over response to cost of living crisis") sale of assets by pension funds that forced the Bank of England to stabilise the market.

Although Truss reversed many of her tax cut measures and sacked her [finance minister](https://www.financedigest.com/scottish-finance-minister-kate-forbes-to-run-for-countrys-leadership.html "Scottish finance minister Kate Forbes to run for country’s leadership"), Kwasi Kwarteng, it proved too little to keep her in office and she was succeeded by Rishi Sunak as prime minister.

The BoE said loans to businesses outside the financial sector – while a volatile data series – contracted in net terms by 7.348 billion pounds, the sharpest drop since mid-2020, when the first [COVID lockdown sent economic activity](https://www.financedigest.com/asias-factory-activity-contracts-despite-chinas-covid-reopening.html "Asia’s factory activity contracts despite China’s COVID reopening") into freefall.

Some 5.579 [billion pounds](https://www.financedigest.com/shell-to-evaluate-25-billion-pound-british-investments-after-windfall-tax.html "Shell to ‘evaluate’ 25 billion pound British investments after windfall tax") of this drop comprised lending to large businesses. Excluding sharp moves around the height of the [COVID-19 pandemic](https://www.financedigest.com/pandemic-restrictions-that-hampered-the-circulation-of-viruses-other-than-covid-19.html "Pandemic restrictions that hampered the circulation of viruses other than COVID-19"), it was the biggest drop on record.

($1 = 0.8344 pounds)

(Reporting by Andy Bruce; Editing by David Milliken and Alison Williams)


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