4 reasons why UK mortgage borrowing has dropped to its lowest levels in 13 months
The UK Finance trade association today reported that mortgage approvals dropped to the lowest levels in 13 months. The report mentioned that the October figures demonstrate a 3% drop in mortgage approvals compared with same month of October last year. This, according to The Independent, appears to be interpreted by some economic analysts as the inevitable start of a downturn for the UK housing market.
The graph data from UK Finance also shows an interesting trend in mortgage owners looking to re-mortgage prior to the interest rate rise that was widely expected and eventually arrived after ten years in November. UK Finance stated that re-mortgaging approvals of 34,036 rose well above the monthly average of 27,163 applications. This was higher than the previous six months and a significant 37% above October of last year.
This analysis is a culmination of a number of financial and consumer perception factors affecting the UK throughout the past couple of months.
There is a general pervasive feeling that the economy will be slowing down. Earlier this month the Bank of England announced that it would be increasing interest rates for the first time in ten years, attempting to slow down inflation, and consequentially the economy.
Also looming over the horizon is Brexit. No one can say with absolute certainty how Britain leaving the European Union will affect the UK, and this uncertainty is holding sway over UK buyers and mortgage borrowing, as buyers will no doubt to be hesitant in taking such a major commitment of taking out a mortgage.
Consumers are also feeling the pinch in their pockets. Pay rises have been stagnant and costs have been rising in some stores, partly attributed to Brexit and also due to general inflation.
Finally, the current situation of the world scene cannot be a great motivator for consumer perceptions. Current world events and their reach will no doubt psychologically affect UK consumers along with everything else already mentioned here.