Mortgage approvals have fallen to an eight-month low as higher interest rates hammer buyers.
Banks approved 43,300 mortgages last month, according to the Bank of England, the lowest number since January when the market was reeling in the wake of the mini-budget and the crunch in gilt markets which followed.
This is down by around one-third on lending volumes a year ago, and takes the mortgage market back to activity levels last seen on a sustained basis in the years following the financial crisis.
It comes as Bank of England policymakers, led by Governor Andrew Bailey, prepare for Thursday’s interest rate meeting. Economists expect the Monetary Policy Committee to hold interest rates at 5.25pc as they assess the impact of higher borrowing costs on the economy.
The average interest rate charged on new mortgages in the month rose to 5.01pc. This marks the first time since 2008 that the average homebuyer has paid more than 5pc to borrow. A year ago the typical buyer paid 2.84pc, while two years ago the cost was just 1.78pc.
Total mortgage debts dropped by £940m in the month as homeowners paid off more debt than new borrowers took out.
Remortgaging is also increasingly unpopular at high interest rates. Just over 20,500 borrowers remortgaged last month, the lowest number since January 1999.
Thomas Pugh, economist at RSM, said low activity levels indicate “house prices probably have further to fall”.
“Admittedly, interest rates on new mortgages will probably drift down a little over the next few months now that interest rates seem to have peaked,” he said.
“But they will remain close to the highest level since the financial crisis. We still expect a peak to trough fall in house prices of a little under 10pc.”