Mortgage Approvals Plummet Amid Inflationary Pressures

The Bank of England reported that mortgage approvals dropped to their lowest level in near three years in August, amidst rising inflationary pressures.

The net borrowing of mortgage debt by individuals was £4.4bn, up from July's £4.1bn but below the expected figure of £4.5bn. However, net mortgage approvals fell to 54,900, the lowest since December 2023 and below both the previous six-month average of 60,100 and the consensus for 56,100.

The effective interest rate on newly drawn mortgages increased to 4.6% from 4.45% in July, further squeezing mortgage activity. Analysts attribute this decline to affordability pressures stemming from the war in the Middle East and subsequent hikes in inflation.