The number of mortgage transactions has fallen by 33% since the Bank of England (BoE) first raised interest rates again in December last year, new analysis has shown.
The BoE increased its base rate from 0.1% to 0.25% last December, before a flurry of rate rises saw the Bank’s Monetary Policy Committee raise interest rates to 1.75% at its most recent meeting.
Octane Capital looked at the average monthly level of mortgage backed transactions between December of last year and the latest available data, which was for March this year. The firm then compared this level of market activity to the four months prior, the period between August and November 2021.
The figures show that since the first of six consecutive base rate increases was implemented in December last year, there have been an average of 37,019 homes purchased each month with the help of a mortgage.
This reflects a 33% decrease when compared to the monthly average of 55,070 per month purchased in the four months prior to this interest rate increase.
Furthermore, Octane Capital’s analysis revealed that the average monthly number of homes purchased with the help of a mortgage has declined across every single local authority since the BoE first increased interest rates.
“Following the BoE’s decision to first increase interest rates in December of last year, there was an almost immediate retraction in market activity coming via the mortgage sector,” commented Octane Capital CEO, Jonathan Samuels.
“This was to be expected given the fact that it was the first base rate increase since November 2017 and particularly given the backdrop of wider economic uncertainty and the cost of living crisis.
“We now know that this was just the tip of the iceberg with respect to increasing interest rates and this latest insight into declining mortgage sales volumes doesn’t yet account for the base rate hikes seen in May, June or August.
"So we expect the decline in market activity coming from mortgage backed homebuyers to be significantly lower still when these figures are finally released.”
The UK housing market in 2024
The performance of the UK housing market in 2024 has largely exceeded many people's expectations, although challenges remain for first-time buyers due to house prices increasing and a testing rental market for many. Regional disparities, such as the North-South divide, also continue to influence housing accessibility and affordability for many buyers in pockets of the country.
Intergenerational lending
MoneyAge News Editor, Michael Griffiths, hosts Family Building Society BDMs, Amar Mashru and Arif Kara, to discuss intergenerational lending and explore ways that buyers can use family income to help increase their borrowing capacity when applying for a mortgage
Helping landlords make their cash work harder
MoneyAge Editor, Adam Cadle, talks to Family Building Society BDMs, Arif Kara and Nathan Waller, about the resilient BTL market, the wide variety of landlords that Family Building Society caters for, and how niche products like an Offset mortgage can help improve cashflow.
© 2019 Perspective Publishing Privacy & Cookies
Recent Stories