The key chart
The key message
UK monthly mortgage flows are moderating but at a slower rate than in the euro area, at least so far!
Monthly UK mortgage flows fell to £4.0bn in October 2022, down from £5.9bn in September. While this was the lowest monthly flow since November 2021 (£3.8bn), it was still very slightly above the pre-COVID average flow of £3.9bn (see chart below).
According to the latest Bank of England data release (29 November 2022), approvals for house purchase, an indicator of future borrowing, also decreased to 59,000 in October 2022, down from 66,000 in September. It is reasonable, therefore, to expect lower flows in the coming months.
The slowdown observed in the UK is less marked than similar developments in the euro area (EA), however. As noted in “Steady as she slows”, EA monthly flows have fallen for four consecutive months from a recent high of €30bn in June 2022 to €8bn in October 2022. October’s EA monthly flow was the slowest since April 2020 and was below the EA’s pre-COVID average flow of €13bn.
It is always dangerous to draw firm conclusions from one month’s data. On a smoothed (3m MVA) basis monthly flows remain above their pre-pandemic levels in both the UK (1.3x) and the EA (1.1x). That said, the relative sharp slowdown in the EA is also clear in the smoothed data. The 3m MVA of monthly mortgage flows in the EA has fallen from 2.1x pre-pandemic levels only three months ago (see chart key chart above).
Please note that the summary comments and charts above are extracts from more detailed analysis that is available separately.