Mortgage approvals forecast to dip by 13% for residential property purchases

The latest mortgage market analysis by specialist property lending experts, Octane Capital, has revealed that the level of mortgage approvals seen across the UK property market is expected to dip in 2022, driven by a -13.4% reduction in buyer demand for residential house purchases. 

Octane Capital’s analysis of Bank of England mortgage data estimates where the market will sit come the end of the year, how this compares to market performance seen over the last decade and which sectors are driving current market trends.

Based on this historic market data, Octane Capital expects the total level of mortgage approvals seen across the UK property market to sit at just shy of 1.570m by the end of 2022, averaging 130,764 per month.

This level of total market activity would mark a -0.2% decline when compared to 2021, however, when dissecting the market by the type of mortgage approval, it’s clear that one sub sector is driving this decline. 

Octane Capital estimates that mortgage approvals for residential house purchases specifically are set to fall to a total of 818,641 in 2022 - a drop of -13.4%.

In contrast, mortgage approvals for those remortgaging are set to climb by 24% on an annual basis, with those classed as other - existing borrowers increasing the size of their current mortgage with the same lender for example, to fund home improvements - also expected to see a jump of 7.6% when compared to 2021.

However, while topline market performance is expected to stutter in 2022, the total level of mortgage approvals seen across the UK will remain some 2.8% higher than they were five years ago and 36.3% above the level seen in 2012. 

While residential house purchases are set to drive the dip seen in 2022, the annual total also remains 2.6% higher when compared to five years ago and 33.8% up on 2012. 

CEO of Octane Capital, Jonathan Samuels, commented:

“We predict that 2022 will see a very marginal decline in topline mortgage approvals and, at first glance, this suggests that the sector will have weathered the rather ferocious storm that has broken in recent weeks

However, when dissecting the market by type of mortgage approval, it’s clear that the damage done to the residential market has been far more pronounced.

In fact, we expect to see mortgage approvals for house purchases take a notable dip come the end of this year. This is due to the recent turbulence seen across the mortgage market, with growing uncertainty and an increased cost of borrowing deterring many buyers from progressing with their purchasing plans. 

At the same time, we’ve seen many existing homeowners rush to remortgage in order to secure a favourable rate before any further increases materialise, as well as an uplift in those borrowing more on their existing mortgage, with both areas of the market bringing a degree of stability where total mortgage approval levels are concerned.”