Mortgage Approvals Plummet as Borrowing Costs Continue to Rise

The Bank of England's latest Money and Credit figures show a further slowdown in Britain's mortgage market, despite consumer borrowing reaching £2.5 billion in August.

Mortgage approvals fell from 55,900 in July to 54,900 in August, well below the six-month average of around 60,100. This decline comes as the cost of taking out a new mortgage continues to rise, making borrowing more expensive for prospective buyers.

The average effective interest rate on newly drawn mortgages increased from 4.45 per cent in July to 4.60 per cent in August, while the average rate on existing mortgage debt edged up from 3.97 per cent to four per cent.

Richard Pinch, Senior Director at Broadstone, warned that rising borrowing costs are putting pressure on the mortgage market, with approvals for both purchases and remortgages falling again in August.