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UK mortgage approvals declined in September, while remortgaging approvals fell to a multi-decade low, according to Bank of England figures on Monday.
Net mortgage repayments were £900 million in September, compared to net lending of £1.1 billion in August.
Further, net mortgage approvals for house purchases in the UK fell to 43,300 in September - the lowest level since January - from 45,400 in August. This was below FXStreet-cited market consensus of 45,000.
‘The drop in mortgage approvals in September left them a third below their usual level in the years leading up to the pandemic as high mortgage rates put homeowners off moving and priced many first-time buyers out of the market,’ commented Capital Economics senior property economist, Andrew Wishart.
Notably, net approvals for remortgaging fell to 20,600 in September, which was the lowest level recorded since January 1999, and down from 25,100 in August.
The effective interest rate on newly drawn mortgages, meaning the actual interest rate paid, increased to 5.01% from 4.82%. On the outstanding stock of mortgages, it rose to 3.14% from 3.06%.
The BoE’s own benchmark interest rate is currently 5.25%, as it was for the whole of September.
The UK central bank noted individuals’ net borrowing of consumer credit fell to £1.4 billion from £1.7 billion the previous month. It attributed the decline to decreased borrowing through other forms of consumer credit, such as car dealership finance and personal loans, as well as slightly lower net borrowing on credit cards.
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