Mortgage Approvals Plummet to Lowest Level in Over Two Years

The Bank of England released its latest Money and Credit report, revealing that mortgage approvals for homebuyers plummeted to their lowest level in over two years. The number of approved mortgages stood at 56,053 in July, a figure last seen in January 2024 when there were 56,032 approvals.

This marks a decline from June's 58,215 mortgage approvals and falls short of the six-month average of 60,800 monthly approvals. Meanwhile, remortgaging approvals increased to approximately 34,500 in July, up from 34,100 in June.

Nationwide Building Society reported that the average UK house price rose by 0.2% month-on-month in August, following a 0.1% dip in July. The average house price across the UK currently stands at £275,465, an increase of 1.6% year-over-year.

Experts attribute the decline in mortgage approvals to rising fixed-rate mortgage costs and geopolitical tensions that have driven up energy prices. Lucian Cook, head of residential research at Savills, noted that while underlying house price affordability has shown signs of improvement, 'the increase in fixed rate mortgage costs we saw in mid-July, has prevented that from translating into any improvement in activity in the market.'

Others point to borrowers shopping around for better rates as remortgaging numbers pick up slightly. Mark Harris, chief executive at SPF Private Clients, stated that 'swap rates, which underpin the pricing of mortgages, remain extremely volatile in response to tensions in the Middle East.'