The Bank of England has revealed that there was a slight fall in mortgage approvals last month.
In its latest Money and Credit Update, the central bank reported that net borrowing of mortgage debt by individuals amounted to £4.7 billion in February.
Mortgage approvals for house purchases fell slightly to 71,000 in February, from 73,800 in January, but remains above the 12-month pre-pandemic average up to February 2020 of 66,700.
Mark Harris, chief executive of SPF Private Clients, said: “The Bank of England records a dip in lending and approvals for house purchases in February, confirming that the froth has come out of the market. However, the numbers are still above the pre-pandemic average, demonstrating a calmer, more measured, and ultimately more sustainable market.
“There is certainly plenty to keep brokers busy as borrowers increasingly worry about rising mortgage rates and are keen to secure a fixed rate in particular before they rise further. With the effective interest rate on newly drawn mortgages rising by 1 basis point to 1.59 per cent in February, the only way is up for rates although they are still at comparatively low levels from an historic perspective.”
Stuart Wilson, corporate marketing director at more2life, added: “Today’s Money and Credit Update is another strong indicator of a thriving mortgage market, with activity now exceeding pre-pandemic levels. It’s therefore no surprise that equity release remains a popular choice for many.
“Soaring living costs are likely to present a real challenge for over-55s in the coming months as rising bills and inflation begin to pinch. As a result, we expect to see a greater number of older homeowners using equity release to augment their income, support family and pay down debt as they seek to make up for the time lost due to two years of lockdowns and Covid restrictions.
“With the average UK house price continuing to climb in recent months, these individuals now have even more value to leverage using the options presented by the wide range of later life lending products.”