The total number of mortgage lending transactions has declined by 7.1% since the Bank of England (BoE) first started to increase interest rates in December 2021, analysis by Octane Capital has shown.

Figures also showed that February’s total of 95,405 total mortgage lending transactions was the lowest monthly total since May 2020.

Octane Capital analysed the number of mortgage lending transactions across the UK market in the 15 months since interest rates started to climb – December 2021 to February 2023, which is the latest available data – and how this market performance compares to the 15 months prior.

The figures show that in the 15 months prior to this first interest rate hike, which saw the BoE start to increase its base rate from its record low of 0.1%, a total just shy of 2.1 million mortgage transactions completed via monetary financial institutions such as banks and building societies, and via specialist lenders, at a monthly average of 138,660.

Since December 2021, the BoE has raised its base rate to 4.25% and the total of mortgage lending transactions has fallen to just over 1.9 million, equating to an average of 128,800 transactions per month.

The figures mean that in total, mortgage lending transactions have fallen by 7.1% since interest rates started to climb. Octane Capital also noted that at 19.5%, the decline seen in transactions fuelled solely by specialist lenders has been far greater than the 5.9% decline seen via monetary financial institutions.

While the data shows that monthly mortgage lending transaction trends have been inconsistent since the first interest rate hike in December 2021, Octane Capital highlighted that that the driving factor behind this decline was last September’s mini-Budget, which sparked turmoil across the mortgage sector.

“The BoE has deployed a rather aggressive policy with regard to curbing inflation via a string of interest rate hikes and it was only a matter of time before this started to have a notable impact on mortgage lending transactions,” said Octane Capital CEO, Jonathan Samuels.

“While the growth in mortgage lending transactions has been inconsistent in the months that followed the first hike in December 2021, it’s fair to say that this negative impact was accelerated quite substantially following September’s mini-Budget and the mortgage market chaos that ensued.

“The broad feeling across the industry is that 2023 is likely to bring greater certainty and stability which should help stabilise the market. However, an eleventh consecutive increase so early in the year is unlikely to fill the nation’s home buyers with confidence and so it could be some months yet before we see this negative trend start to reverse fully.”

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