Warnings that a ‘slash and pillage Budget’ would threaten property market recovery
There were 62,000 home loan approvals in July as falls in interest rates made monthly repayments more affordable.
Martin Lewis speaks on loans and mortgages
New mortgage approvals have risen to a two-year high, however there are fears government gloom threaten a property recovery.
There were 62,000 home loan approvals in July as falls in interest rates made monthly repayments more affordable.
However, mortgage brokers fear the warnings from Sir Keir Starmer about the nation’s finances and threatened tax rises and cuts in the October Budget will pour cold water on the sector.
The Bank of England data shows the rise in house purchase mortgage approvals also saw the total figure loaned was £2.8billion in July, which was the highest since November 2022.
Simon Bridgland, Director at Release Freedom, told Newspage: "The mortgage market went through the gears in July. If the general positive sentiment in the market continues, we should see a healthy September after the kids have gone back to school.”
However, he warned: “The clear and present danger ahead is the markets' reaction to the looming slash and pillage Budget in October.”
Peter Stimson, Head of Product at MPowered Mortgages, said: “Demand for mortgages in July was stronger than usual in what is a typically quieter month. That shows through very clearly in this data, which is specifically being influenced by house purchase activity.
“One of the key elements driving demand, along with more properties coming to market, is lower mortgage rates driven by falling swap rates and savage competition between lenders.
“We are now seeing much more purchase activity occurring. This is largely an expression of confidence in the market by both sellers and buyers, helped by mortgages gradually becoming more affordable over the last three months.”
Stephen Perkins, Managing Director at Yellow Brick Mortgages, said: "Lower mortgage rates put the jump leads on the market in July. Mortgage demand didn’t take its usual summer holiday this year and remained strong throughout July and August.
“Lenders reducing rates have encouraged borrowers that now is a good time to make their move, especially when there are indications of tougher times ahead.”
Mark Eaton, chief operating officer at April Mortgages, said home loan demand in July and August exceeded expectations for these typically quieter months.
He added: “The symbolic August 1 base rate cut may have contributed to this increased activity. However, uncertainty persists with potential inflation rises and the upcoming Autumn Budget, which borrowers are likely considering.”
Darryl Dhoffer, Mortgage Broker at The Mortgage Expert, said: “A further potential rise in inflation could prove a drag and the already infamous Autumn Budget is looming. Hopefully, the Bank of England will give us another reduction in the Base Rate before the year is out, which will support demand and drive activity."
Gabriel McKeown, Head of Macroeconomics at Sad Rabbit Investments, warned: “The path ahead is anything but straightforward, with several potential roadblocks looming on the horizon.
“The Autumn Budget could be the true wild card in the deck, potentially throwing a spanner in the monetary policy works should markets react unfavourably to fiscal policies perceived as inflationary.”
In the intricate dance of monetary policy, the Bank of England must tread carefully, as while the allure of lower rates is strong, the potential pitfalls are numerous."
