Mortgage Approvals Forecast to Dip by 13% for Residential Property Purchases

The level of mortgage approvals seen across the UK property market is expected to dip in 2022, driven by a -13.4% reduction in buyer demand for residential house purchases.

Analysis of Bank of England mortgage data estimates where the market will sit come the end of the year, how this compares to market performance seen over the last decade and which sectors are driving current market trends.

Based on this historic market data, specialist property lending experts, Octane Capital, expects the total level of mortgage approvals seen across the UK property market to sit at just shy of 1.570m by the end of 2022, averaging 130,764 per month.

This level of total market activity would mark a -0.2% decline when compared to 2021, however, when dissecting the market by the type of mortgage approval, it’s clear that one sub sector is driving this decline.

It’s estimated that mortgage approvals for residential house purchases specifically are set to fall to a total of 818,641 in 2022 – a drop of -13.4%.

In contrast, mortgage approvals for those remortgaging are set to climb by 24% on an annual basis, with those classed as other – existing borrowers increasing the size of their current mortgage with the same lender for example, to fund home improvements – also expected to see a jump of 7.6% when compared to 2021.

However, while topline market performance is expected to stutter in 2022, the total level of mortgage approvals seen across the UK will remain some 2.8% higher than they were five years ago and 36.3% above the level seen in 2012.

While residential house purchases are set to drive the dip seen in 2022, the annual total also remains 2.6% higher when compared to five years ago and 33.8% up on 2012.

CEO of Octane Capital, Jonathan Samuels, commented:

“We predict that 2022 will see a very marginal decline in topline mortgage approvals and, at first glance, this suggests that the sector will have weathered the rather ferocious storm that has broken in recent weeks

However, when dissecting the market by type of mortgage approval, it’s clear that the damage done to the residential market has been far more pronounced.

In fact, we expect to see mortgage approvals for house purchases take a notable dip come the end of this year.

This is due to the recent turbulence seen across the mortgage market, with growing uncertainty and an increased cost of borrowing deterring many buyers from progressing with their purchasing plans.

At the same time, we’ve seen many existing homeowners rush to remortgage in order to secure a favourable rate before any further increases materialise, as well as an uplift in those borrowing more on their existing mortgage, with both areas of the market bringing a degree of stability where total mortgage approval levels are concerned.”

Table shows the forecast total and average monthly level of mortgage approvals for 2022, the breakdown by type of mortgage approval and how this level of market activity compares to historic market trends
Year	Total Annual Approvals – House Purchase	Average Monthly Approvals – House Purchase	Total Annual Approvals – Remortgaging	Average Monthly Approvals – Remortgaging	Total Annual Approvals – Other	Average Monthly Approvals – Other	Total Annual Approvals – All	Average Monthly Approvals – All
2012	611,996	51,000	339,792	28,316	199,493	95,940	1,151,281	95,940
2013	735,067	61,256	392,037	32,670	157,666	107,064	1,284,770	107,064
2014	781,891	65,158	390,398	32,533	128,673	108,414	1,300,962	108,414
2015	811,956	67,663	455,234	37,936	135,124	116,860	1,402,314	116,860
2016	810,046	67,504	524,644	43,720	157,984	124,390	1,492,674	124,390
2017	797,567	66,464	561,142	46,762	167,826	127,211	1,526,535	127,211
2018	781,284	65,107	582,701	48,558	169,587	127,798	1,533,572	127,798
2019	789,201	65,767	587,407	48,951	173,059	129,139	1,549,667	129,139
2020	820,144	68,345	452,257	37,688	135,610	117,334	1,408,011	117,334
2021	944,776	78,731	460,544	38,379	166,698	131,002	1,572,018	131,002
2022 (Estimated)	818,641	68,220	571,208	47,601	179,315	130,764	1,569,164	130,764
1 year change %	-13.4%		24.0%		7.6%		-0.2%
5 year change %	2.6%		1.8%		6.8%		2.8%
10 year change %	33.8%		68.1%		-10.1%		36.3%