Bank of England mortgage approvals: “increased use of plastic shows unbelievable pressure people are under” – industry reaction

by | Aug 30, 2022

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Following the Bank of England Money And Credit report (July) published this morning, property and mortgage experts have reacted.

Andrew Montlake, managing director of the UK-wide mortgage broker, Coreco: “The uptick in mortgage approvals shows there’s still demand out there for property, even as the cost of living crisis goes from bad to worse. The obscene cost of renting is certainly incentivising people to buy as it’s still often cheaper to own than to rent, even with the higher rates we have today.

”The balance of power has also shifted from seller to buyer in recent months and that’s encouraging people to buy as they’re able to negotiate much harder on price. The uptick in remortgages is also no surprise, as people seek to reduce their single largest outgoing ahead of the storm. The annual growth rate in credit card use will not go unnoticed by policymakers. It’s a clear sign of the stress millions of households are under.”

Ross Boyd, founder of the always-on mortgage comparison platform, Dashly.com“Remortgage activity is rampant right now. People see the direction rates are headed and are doing their best to mitigate the impact on their finances. In many cases, they’re paying the early redemption charge as they’re betting on rates rising significantly to combat spiralling inflation.

“Paying an ERC now could save them lots over time. Our platform automatically calculates whether you can save by paying an ERC and we’re busier than we’ve ever been at present. The increased use of plastic shows the unbelievable pressure many people are under. We are on the cusp of an extremely turbulent 12-18 months for the economy.”

Rhys Schofield, managing director at Belper-based Peak Money“All the data points to the fact that it’s still pretty busy in the property market. July and August are always quieter on purchase work but remortgage enquiries went through the roof. We saw our remortgage enquiries online increase by 227% in August alone as people looked to consolidate debt or secure a new fixed rate to protect against future rate rises.”

Graham Cox, founder of the Bristol-based broker, SelfEmployedMortgageHub.com“These latest Bank of England figures show credit card debt increasing at the fast rate since 2005 as the cost of living crisis takes hold. What’s alarming is we’ve yet to face the worst of it, with energy prices for individuals and businesses set to go through the roof.

“Mortgage approvals are still strong, just shy of pre-pandemic 2020 figures, but these numbers really reflect people applying for a mortgage in the spring. I expect transaction levels to tail off considerably over the coming months and even next spring, as the full force of rising costs strangles demand.”

Marcus Wright, MD of independent mortgage broker, Bolton Business Finance: “The increase in consumer credit borrowing is likely just the start of a massive increase in personal debt, caused by soaring energy bills and other increasing prices. With a long recession being predicted throughout 2023, I expect this to increase further.

“While the housing market is still looking resilient for now, it takes longer for changes to the base rate and other economic factors to have an effect. However it’s likely mortgage borrowing will start to decrease heading into winter as the cost of living crisis starts to bite and potential further base rate increases slow down the property market.”

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