UK Mortgage Approvals Plummet to Two-Year Low Amid Rising Costs

The number of mortgage approvals for home-buyers in the UK has dropped to its lowest level in over two years, according to Bank of England figures. In July, there were 56,053 mortgage approvals made to home-buyers, down from 58,215 in June and marking the lowest monthly figure since January 2024 when there were 56,032 approvals.

This decline in mortgage approvals is a concern for the housing market as it suggests that demand may be weakening. The average UK house price edged up by 0.2% month-on-month in August, according to Nationwide Building Society, but at £275,465 it remains high compared to previous years.

Experts point to several factors contributing to the decline in mortgage approvals. Lucian Cook, head of residential research at property firm Savills, notes that the increase in fixed rate mortgage costs has prevented an improvement in market activity, while Hina Bhudia, a partner at Knight Frank Finance, attributes it to geopolitical tensions and elevated energy prices.

Remortgaging approvals did see a slight increase, suggesting that borrowers are shopping around for better rates. However, the volatility of swap rates remains a concern as they underpin the pricing of mortgages.