Mortgage approvals for residential property purchases fell to 53,400 in September, their lowest level since the end of 2023, according to the latest Bank of England figures. This marks the third consecutive monthly decline, down from 54,800 in August.
Net lending for mortgages also weakened, dropping to £3.9bn from £4.2bn the previous month. The slowdown comes as buyers face rising mortgage costs, stubborn inflation, and uncertainty over the direction of interest rates. The effective interest rate on newly drawn mortgages increased to 4.63% in September, up from 4.6% in August.
Remortgage approvals rise sharply
While purchase approvals fell, remortgage approvals climbed significantly, rising from 34,000 to 42,600. This suggests that existing homeowners are seeking to lock in rates amid the uncertain outlook.
Industry experts point to the increase in fixed-rate mortgage costs as a key factor behind the decline. Lucian Cook, head of residential research at Savills, warned that the slowdown could continue into next year.
“Mortgage approvals fell to their lowest level since the end of 2023 in September and have remained below 60,000 for five consecutive months. This is a direct reflection of increases we have seen in fixed rate mortgage costs,” Cook said.
Budget measures fall short
The figures were released a day after the chancellor’s Budget, which introduced measures aimed at helping first-time buyers but offered little direct support for the wider housing market. Jason Tebb, president of OnTheMarket, said the latest decline reflected continued uncertainty among buyers and sellers.
“Unfortunately, the Budget delivered very little of consequence to get the housing market moving,” Tebb said. While the Your First Home scheme was welcomed for supporting first-time buyers of new-build homes, he noted there was little beyond this to encourage transactions and activity.
Tomer Aboody, founding director of MT Finance, expressed similar concerns, citing low confidence with the current government as the cost of living continues to rise. He welcomed the First Time Buyer ISA and Your First Home equity scheme but argued the Budget offered little to improve wider market activity.
Buyers and sellers await confidence
Jeremy Leaf, a north London estate agent, said the figures reflected hesitation ahead of the Budget. He described mortgage approvals as “arguably the best barometer of future market activity” and noted that many buyers and sellers had been “sitting on their hands in anticipation of yesterday’s announcements.”
Simon Gammon, managing partner at Knight Frank Finance, said rising inflation and wholesale funding costs had prompted lenders to reprice mortgages. He described the low-key Budget as a positive, with government borrowing costs edging lower following the chancellor’s speech, removing one source of uncertainty for the housing market.
Nathan Emerson, CEO of Propertymark, said the decline in borrowing was disappointing but understandable, with buyers “treading a cautious path” in a demanding market. He welcomed the increase in remortgage approvals and said greater housing supply would be essential to improving affordability.
