Mortgage approval levels are expected to decline by 11% annually come the end of 2023, Octane Capital has said.

Despite the forecasted drop, the specialist lending firm has stated that short-term positivity is expected with an uplift of activity during the second half of the year.

Analysing mortgage approval data from the Bank of England (BoE), Octane Capital found that 54,662 mortgages were approved in June 2023, marking a 7% increase on May. It was also the second consecutive month that approvals have climbed.

Current mortgage approval levels are also 37% above the market low in January 2023, which sat at 39,825.

Although there is recent positivity, the number of mortgages approved in the first half of 2023 totalled 291,578, which is 29% less than the number of approvals seen in the first half of 2022.

However, Octane Capital has forecast that monthly figures could hit 69,034 by the end of the year, signalling a return to the previous highs of 2022 before the mini-Budget in September.

Chief executive officer at Octane Capital, Jonathan Samuels, said: “The upward trajectory of interest rates and the resulting reduction in buyer activity are expected to see total mortgage approval levels dip for a second consecutive year in 2023.

“That said, it would seem that the worst is behind us and we are now starting to move away from the market lows seen earlier this year, with positive growth expected to materialise over the remaining six months.

“While this short-term positivity won’t be enough to bring about an annual increase in total mortgage approvals, it does set a very firm foundation for further positive growth in 2024.”

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