New data from the Bank of England has revealed a significant downturn in mortgage approvals for home buyers, with figures dropping to their lowest level in a year-and-a-half during December 2025. The latest Money and Credit report shows that only 61,013 mortgages were approved for house purchases last month, marking a notable decline from 64,072 in November and representing the weakest performance since June 2024, when 60,920 approvals were recorded.
Market Uncertainty Following Autumn Budget
Finance and property experts have attributed this decline to the lingering uncertainty surrounding last year's autumn Budget, which created hesitation among potential buyers and lenders alike. However, with greater clarity now emerging around property taxes and recent interest rate cuts, many analysts anticipate a gradual recovery in market momentum throughout the coming months.
Expert Analysis and Predictions
Thomas Pugh, chief economist at RSM UK, commented on the figures, stating: "The drop in mortgage approvals to 61,013 is consistent with weak momentum in the housing market during the fourth quarter of 2025, which is unsurprising given the uncertainty generated by the Budget." He added: "Now that there is some certainty around property taxes, interest rates were cut in December, and are likely to be cut again in April, the housing market should rebuild some momentum this year, especially as there is likely to be a degree of pent-up demand from the weakness in the fourth quarter."
Rob Wood, chief UK economist at Pantheon Macroeconomics, offered a similar outlook, suggesting: "We think there is a good chance that approvals will trough in December or perhaps January before recovering through 2026." Frances McDonald, director of research at Savills, echoed this sentiment, noting: "With lower mortgage rates and a reduced likelihood of any further changes to the property tax system, we expect more stability for both activity and prices throughout this year."
Remortgaging Shows Contrasting Trend
In contrast to the decline in purchase approvals, the Bank's report indicated a slight increase in remortgaging activity. Approvals for remortgaging rose by 1,600 to reach approximately 38,400 in December, though it is important to note that these figures only capture remortgaging with a different lender.
Mark Harris, chief executive of mortgage broker SPF Private Clients, explained: "Remortgaging numbers rose, suggesting that borrowers coming off low rates are shopping around for the best rate possible rather than opting for the ease of sticking with their existing lender." He further highlighted: "As we move towards spring, the good news for borrowers is that lenders are keen to lend and have the funds available to do so. Many of the big lenders have reduced their mortgage rates and while some have increased pricing in recent days, we expect rates to jump around, rather than significantly move one way or another."
Broader Financial Landscape
The report also provided insights into other areas of borrowing and saving. The annual growth rate for consumer credit remained steady at 8.2% in December, unchanged from November. Within this category, credit card borrowing saw its annual growth rate increase to 12.4% from 12.1%, reaching its highest point since January 2024.
On the savings front, households deposited an additional £4.8 billion with banks and building societies in December, a substantial decrease from £8.8 billion in November. Mark Hicks, director of active savings at Hargreaves Lansdown, attributed this seasonal dip to Christmas spending and tax bill preparations, noting: "Christmas often takes a bite out of savings, so there's no surprise that new savings fell back, after growing for the previous three months. It's not just Christmas though, people will also take cash out in order to pay their tax bill in the run-up to deadline for self-assessment at the end of the January."
Business borrowing also showed a reduction, with UK non-financial businesses borrowing a net £1 billion from banks and building societies in December, including overdrafts, compared to £6.2 billion in November.
Property Transaction Data Provides Context
These figures were released alongside separate data from HM Revenue and Customs, which reported approximately 100,440 home sales in December. This represents a 5% increase compared to December 2024 but a marginal decrease of less than 1% from November 2025.
Karen Noye, a mortgage expert at wealth manager Quilter, observed: "Both the Bank of England Money and Credit statistics and HMRC's property transaction data point to a housing market very much in a holding pattern." Nicky Stevenson, managing director at Fine & Country, provided additional context from the ground level: "Our agents are continuing to report solid inquiry levels, especially when the seller has taken realistic pricing advice. We are seeing more people looking to sell at the moment, and with greater choice across many parts of the country, buyers have more options than they did in recent years. However, we are also seeing that once a buyer has found the right property, they are willing to move quickly. That considered approach is helping sustain transaction levels even during what is a traditionally tricky month for moving."
