UK Mortgage Approvals Plummet to Lowest Level Since January 2024

UK mortgage approvals have hit their lowest level since January 2024, indicating a weakening demand in the housing market. According to Bank of England data, lenders approved 56,053 mortgages for house purchases in July, down from 58,215 in June and below the median forecast of 59,500.

The decline in approvals points to softer housing activity in the months ahead, as mortgage approvals are an important indicator of future property transactions. The figures suggest buyers remain cautious despite modest growth in house prices, which rose 1.6% in the year to August, according to Nationwide.

Higher borrowing costs continue to weigh on prospective buyers, with the effective interest rate on newly drawn mortgages rising to 4.45% in July from 4.35% in June. The Bank of England's interest-rate outlook will remain crucial for the property market, as markets have been pricing in a possible 25-basis-point increase by the end of the year.

The broader borrowing picture was mixed, with unsecured consumer borrowing increasing by about £2 billion in July, above economists' expectations. This suggests households continued to rely on credit for spending even as demand for housing finance weakened.