The value of new mortgages written in the three months following the "mini" Budget was down 25 per cent, marking the toughest quarter in over seven years - excluding the pandemic.
Mortgage commitments fell to £58.4bn between October and December 2022, compared with the £77.3bn committed at the end of 2021.
If the pandemic is factored out, the last quarter was the lowest quarter for new mortgage business across the UK since the beginning of 2015, according to data published by the Financial Conduct Authority yesterday (March 14).
The period immediately followed the "mini" Budget, which was announced seven days prior.
The September Budget saw former chancellor Kwasi Kwarteng announce a series of unfunded tax cuts which sent swap rates, an indicator for mortgage rates, soaring.
Lenders pulled out from the market en masse as they struggled to price their mortgages in the wake of economic uncertainty as the pound crashed and pension funds were thrown into turmoil.
Back in December, managing director of mortgage brokerage Coreco, Andrew Montlake, said the third and fourth quarters of 2022 "may as well be in different dimensions", accusing the "mini" Budget of "torpedoing demand".
This drop in mortgage demand was largely down to them becoming more expensive. Average rates peaked at around 6.5 per cent during the quarter, with rates on equity release products reaching 8 and 9 per cent.
Following the "mini" Budget, the Mortgage Advice Bureau announced an expected reduction in broker numbers, along with LSL's subsidiary Embrace.
Before Christmas, Leeds-based equity release advice firm Age Partnership also had to cut nearly 10 per cent of its staff citing the Kwarteng's "mini" Budget as the sole cause.
Last month, lenders introduced a flurry of headline rates which brokers said was them trying to stimulate the mortgage market again.
Property transaction volumes got off to their slowest start in over a decade this year, falling 27 per cent since the end of 2022.
More recently, however, these rates have been withdrawn. Brokers have more recently predicted that mortgage rates are unlikely to settle until next year.
ruby.hinchliffe@ft.com
