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UK mortgage approvals for October fall 10% after mini-budget

The chaos in the mortgage market that followed Kwasi Kwarteng’s now infamous mini-budget led to a 10% fall in the number of mortgage approvals during October.

According to the latest figures from the Bank of England, the number of mortgages approved by lenders slumped from 66,000 in September to 59,000 last month – the lowest monthly total for mortgage approvals since June 2020.

The figures cover the period immediately after Kwarteng delivered the 23 September mini-budget that sent the markets into turmoil, forcing the Bank of England to start buying long-dated UK government bonds in an attempt to stabilise the market.

More than 40% of the mortgage market disappeared almost overnight, leaving many homebuyers without a firm loan offer, unable to afford the home they had intended to buy and forcing them to pull out.

Calm was restored by the reversal of most of the mini-budget, but homebuyers still face much higher interest costs.

The bank said that the interest rate on new mortgages jumped by 0.25% to 3.09% in October, while net borrowing of the mortgage debt by individuals decreased from £5.9bn to £4.0bn in October.

Simon Gammon, a managing partner at Knight Frank Finance, said this lending data shows activity “slowing markedly”.

“Monthly mortgage approvals for purchasing homes are running below long-run averages, which may be a sign of things to come. The mini-budget weighed heavily on sentiment, and it’s now clear many buyers have opted to postpone acting at least until the other side of Christmas,” he said.

On Monday, the property website Zoopla reported demand had weakened, prompting homeowners to accept offers below the asking price. The company predicts house prices will fall by about 5% next year.

New sales have dropped by up to 50% in previous hotspots and areas where higher mortgage rates will hit buying power hardest – in southern England, the East Midlands and Wales, it said.

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