UK Mortgage Approvals Plummet Amid Wholesale Funding Volatility

Mortgage approvals have been through their most volatile year since 2022's mini-Budget, and July's figures show that volatility has not yet dissipated. According to Bank of England data, mortgage approvals for house purchases dropped by 3.7% in July compared to the previous month, with a year-over-year decline of 14.9%. This sharp swing is attributed to wholesale funding costs rather than changes in the Bank Rate itself.

Mark Harris, chief executive of SPF Private Clients, said that swap rates - which underpin mortgage pricing - have been rising due to tensions in the Middle East and higher oil prices. Until these issues are resolved, he expects continued volatility in the market.