The Bank of England’s money and credit data showed mortgage approvals for house purchase dropped to 67,199, from 71,851 the month before. The level of purchase approvals in October was closer to pre-pandemic averages of 66,700 in the 12 months to February 2020. 

Net borrowing – or the amount repaid against the amount outstanding – amounted to £1.6bn, the lowest since July when it reached £2.2bn. Compared to September, this was down from £9.3bn. The report said this was driven by borrowing being brought forward to September as buyers took to take advantage of stamp duty land tax relief before it ended. 

During October, gross mortgage repayments also fell £18.2bn from £20.6bn in September. 

Stable remortgage activity 

Approvals for borrowers remortgaging with a different lender rose slightly from 41,587 to 41,642 in October.  

The report said this was still low on the 49,100 averages in the 12 months to February last year but the highest since March 2020 when approvals totalled 42,700. 

Meanwhile, interest rates for both newly borrowed and outstanding mortgages fell to new lows of 1.59 per cent and 2.03 per cent respectively. These represented declines of 19 basis points and one basis point since September. 

Calmer market the new normal 

John Phillips, national operations director, Just Mortgages said the “clouds were clearing” after the stamp duty holiday and the figures showed a “true picture of the mortgage market”. 

He also said refinancing would take precedent, adding: “With rates at a new series low, approvals for remortgaging increased. This trend is set to continue, with remortgaging taking centre stage in the final month of the year.” 

Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “It’s unsurprising that activity in October has been more subdued than previous months, with the end of the stamp duty holiday and the approach of the traditional quiet period for the purchase market. These figures are a good indicator of where the market will likely find its ‘new normal’ in the new year. 

“While things are getting quieter on the purchase side of the market, there’s still a very lively remortgage market that offers plenty of opportunities for brokers.”