According to a recent published report by the Council of Mortgage Lenders, mortgage market activity is softening in response to rising interest rates.

The fall in buyer interest has been greatest among first-time buyers, where numbers are down 4% compared to last year. A typical first-time buyer is now borrowing more than 3.3 times their income and faces levels of mortgage interest repayments relative to income last seen in the early 1990’s.

March was the first month in which the number of loans to home movers fell below that of a year earlier. The number of approvals for further advances has also fallen to the lowest level since 2001 which suggests that higher interest rates are reducing the attractiveness of extracting equity to finance home improvements and general spending.

The impact of interest rates on activity has not been evenly distributed across the UK, with activity strongest in London and the South East, Scotland and Northern Ireland. House price growth is 50% in Northern Ireland and close to 14% in Scotland and London, but around 7% to 8% in the Midlands and Northern regions.
In addition, the underlying level of mortgage lending probably peaked in March, with gross lending reaching £31.8bn, but it fell to £30.1bn in April. This was 9% up on a year earlier, although it is the lowest monthly figure since last October. The value of mortgages outstanding continues to grow at an annual rate close to 11.5%. The lower value of mortgage approvals seen in the last couple of months almost certainly means that the underlying levels of gross mortgage lending will soften a little in the months ahead.