The UK’s mortgage market has faced a challenging period, with mortgage approvals taking a significant dip in 2023. However, there’s a silver lining on the horizon as experts predict a rebound in 2024.
According to analysis by GetAgent, a leading comparison website, there was a notable drop in the number of mortgages approved in 2023. Compared to the previous year, the monthly mortgage approvals plummeted by up to 24%. When we look at the data from January to October 2023, an average of only 47,602 mortgages were approved each month. If this trend persisted through the end of the year, the total would barely reach 571,219.
This downturn isn’t a new phenomenon, though. Mortgage volumes have been on a downward trajectory for two consecutive years. From 2021 to 2022, there was a 20% decrease, dropping from 937,093 to 752,131. The numbers paint a stark picture: a 39% drop from the peak in 2021, translating to 365,874 fewer mortgages.
A Glimmer of Hope on the Horizon
Despite the gloomy statistics of the past year, there’s optimism for 2024. The Bank of England’s decision in December to maintain the base rate for the third consecutive month is seen as a positive sign. This move has brought some much-needed stability to the market.
More good news comes from GetAgent’s observation that the cost of lenders’ funding is decreasing. This could lead to more competitive mortgage rates in 2024, potentially reversing the downward trend of the last two years.
2021 – A Year Hard to Beat
It’s important to remember that the peak year of 2021 was quite exceptional. It was significantly boosted by the government’s stamp duty holiday and supported by a record low base rate of 0.10% for most of the year. While 2024 is expected to be an improvement over 2023, reaching the heights of 2021 might still be a tall order.
Expert Insights
Colby Short, the co-founder of GetAgent, shed light on the situation: “2023 was a difficult year for the property industry, as higher mortgage rates have dragged down people’s ability to buy. The one positive is the Bank of England has left the base rate unchanged since August 2023, which is helping people adjust to a new normal, as well as raising the potential for rate cuts in the new year.”