Mortgage transactions down 33% since first interest rates rise

The latest analysis by specialist property lending experts, Octane Capital, looked at the average monthly level of mortgage-backed transactions between December of last year and March this year (latest available).

They then compared this level of market activity to the four months prior (August 2021 to November 2021).

At a regional level, the North East has seen the largest reduction in mortgage market activity from homebuyers, with mortgage fuelled purchases down by 39%, followed by the East Midlands (-36%).

At the local authority level, mortgage market activity has fallen to the largest extent, with property purchases down by -50% since December when compared to the four months prior.

Teignbridge, Newark and Sherwood and Tewkesbury have seen a -49% decline in market activity coming via mortgage-funded homebuyers. Runnymede, North Norfolk, South Holland and Allerdale also make the top 10 with a -47% drop, as do Bolsover (-46%) and Peterborough (-46%).

In fact, the average monthly number of homes purchased with the help of a mortgage has declined across every single local authority since the Bank of England first increased interest rates.

Clackmannanshire has seen the smallest decline at -2%, with South Ayrshire (-11%), Inverclyde (-13%), Merthyr Tydfil (-15%) and the London Borough of Hackney (-15%) also amongst the most marginal drops.

Jonathan Samuels, CEO of Octane Capital said, “Following the Bank of England’s decision to first increase interest rates in December of last year, there was an almost immediate retraction in market activity coming via the mortgage sector.

“This was to be expected given the fact that it was the first base rate increase since November 2017 and particularly given the backdrop of wider economic uncertainty and the cost of living crisis.

“We now know that this was just the tip of the iceberg with respect to increasing interest rates and this latest insight into declining mortgage sales volumes doesn’t yet account for the base rate hikes seen in May, June or August.

“So we expect the decline in market activity coming from mortgage-backed homebuyers to be significantly lower still when these figures are finally released.”