The number of mortgage approvals for home purchase hit an eight-month low during September, Bank of England data shows.
Mortgage data from the Bank of England has revealed there were 43,300 net approvals for house purchase last month.
That is 4.6% down from 45,400 in August.
It follows an 8.4% drop between July and August.
Rosie Hooper, chartered financial planner at Quilter suggested the housing market is reeling from the higher interest rate environment and this is translating into a very quiet period for house sales.
She said: “Many people with house purchase ambitions are opting to sit on their hands for the moment to try to achieve a combination of lower house prices and hopefully lower mortgage costs.
“Mortgage rates have been steadily dropping but they are still eye wateringly expensive. In fact, the ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages saw a 19 basis point increase and now sits at 5.01%.”
Hooper added that if properties start to pile up during a time when demand is as muted as it is, house prices may continue to drop to try to attract those buyers still keeping an eye on the market.
She added: “We do suffer from a lack of housing stock in this country though and renting is proving to be more and more expensive so this will help coax buyers back to the market despite the difficult mortgage rate environment. We are likely to see house prices continue to drop for the rest of this year and into next but if the Bank of England eventually starts to decrease interest rates in the future this should help make the market more competitive, once again lifting prices.”
Jason Tebb, chief executive of OnTheMarket, said buyers remain cautious in light of numerous interest rate rises and the continued high cost of living.
He said: “The pause in rate hikes in September was welcome, with borrowers hoping that base rate is finally at, or very close to, its peak. With inflation sticking at 6.7% last month, all eyes will be on the Bank of England to see whether it raises rates again this week, further impacting the affordability of those relying on mortgages.
“Despite all these headwinds, those buyers who are committed to moving are getting on with it, with our own data for September indicating that sentiment remains remarkably stable. However, buyers are highly price-sensitive, so sellers looking to transact this side of Christmas must price sensibly.”