The degree of mortgage approvals for home-movers hit the bottom degree for the reason that Nineteen Seventies amid the cost of residing disaster in 2023, new knowledge reveals.
UK Finance’s quarter 4 family finance assessment highlighted how affordability pressures hit the housing market final 12 months.
High inflation coupled with greater mortgage rates of interest led to a pointy fall in mortgage lending throughout all sectors, the banking trade body said.
The variety of loans to first-time patrons final 12 months was the bottom since 2013, down 22.4% on 2022. But home movers, most of whom don’t obtain the identical kind of assist from household help or Stamp Duty exemptions, have been hit even tougher, with approvals falling by 26%.
The 251,000 loans to home movers final 12 months was the bottom determine since 1974, based on the assessment.
Affordability pressures meant debtors have been selecting longer mortgage phrases to decrease the cost of month-to-month funds, UK Finance mentioned.
By the top of 2023, almost one in 5 FTBs have been borrowing with a time period of over 35 years, in contrast with fewer than one in 10 the 12 months earlier than.
The variety of functions for mortgage loans really rose within the fourth quarter of 2023 as inflation pressures eased, the Bank of England held rates of interest and mortgage pricing continued to drop.
But UK Finance cautioned that mortgage pricing nonetheless stays greater than what many debtors are used to.
Mortgages in arrears rose all through 2023 to 107,250, the report mentioned, however this quantity nonetheless accounts for lower than 1% of the overall variety of excellent mortgages.
The variety of possessions remained largely static throughout 2023, numbering 1,150 within the fourth quarter and 4,620 in 2023 as a complete. The possessions which can be taking place are long-term instances from earlier than the pandemic.
Eric Leenders, managing director of private finance at UK Finance, mentioned: “2023 was a tricky 12 months for UK households and we count on to see continued challenges in 2024. Affordability stays a barrier to home possession, however pressures ought to begin to ease regularly by this 12 months and subsequent.
“Amidst ongoing cost challenges, it’s encouraging that customers don’t look to be running up higher levels of unsecured debt. But we know some households will be more affected than others – if you are struggling with personal loan, credit card or mortgage repayments, please reach out to your lender as soon as possible for help.”
