Rising interest rates lead to 10 year high in mortgage market cancellations 

Research by debt advisory specialists, Sirius Property Finance, has shown that while a cooling housing market has led to fewer mortgage approvals, a greater degree of mortgage sector turbulence has seen an increase in the number of mortgage offers being cancelled as a proportion of all mortgages approved.

Sirius Property Finance analysed mortgage approval data from the Bank of England looking at the gross number of approvals and cancellations and how these have changed on an annual basis.

The research shows that some 891,990 mortgages were approved in 2022, an average of 74,333 per month. This marked a -18.4% drop on the previous year, when gross approvals hit a 10 year high of almost 1.1m. The 891,990 approvals seen in 2022 was also the lowest annual total since 2018.

At the same time, fewer mortgage approvals also led to a decline in mortgage cancellations, with 136,970 cancellations being seen throughout 2022, a drop of -13.8% on the previous year.

However, not only was this total number of cancellations the second highest in the last 10 years, the analysis by Sirius Property Finance shows that it was the highest proportion when compared to total approvals seen in the last decade.

In fact, in 2022 mortgage cancellations accounted for 13.3% of all gross mortgage approvals, creeping up by 0.6% versus 2021 and the highest level of mortgage market instability seen since 2013.

Managing Director of Sirius Property Finance, Nicholas Christofi said, “As interest rates have continued to climb, it’s not only had an impact on the appetite of the nation’s homebuyers, but it’s led to a growing level of mortgage market instability.

While both the volume of mortgage approvals and cancellations have dropped, the number of cancellations as a proportion of mortgage approval market activity has actually climbed to its highest level in the last decade.

This demonstrates the far trickier landscape buyers are having to negotiate when it comes to the higher cost of borrowing and the reluctance that many have had in following through with a mortgage offer as interest rates have risen.”