Mortgage Approvals Hit Near Three-Year Low Amid Inflation Pressures

The Bank of England reported that mortgage approvals plummeted to their lowest level in nearly three years, amidst rising inflationary pressures. The central bank's money and credit report showed net borrowing of mortgage debt by individuals rose to £4.4bn in August, up from July's £4.1bn.

However, the more significant indicator, net mortgage approvals, dropped sharply to 54,900, lower than both the previous six-month average of 60,100 and consensus for 56,100. This decline came as the effective interest rate on newly drawn mortgages increased to 4.6% from 4.45% in July.

Katie Clinton, head of financial services advisory at KPMG UK, stated: 'A further fall in mortgage approvals points to affordability pressures continuing to weigh on housing demand, as the shocks from the Iran conflict push up both inflation and mortgage rates.'