UK Mortgage Demand Drops to 32-Month Low Amid Rising Borrowing Costs

UK mortgage demand plummeted to a 32-month low in August as buyers were deterred by rising borrowing costs linked to the war in Iran, according to data from the Bank of England.

The number of mortgages approved for new home purchases fell to 54,918, the lowest monthly total since December 2023, with lending to homebuyers dropping 15% compared to August last year.

Approvals for remortgaging also dipped to around 34,000 in August, down from 34,600 in July, while the 'effective' interest rate on newly drawn mortgages increased to 4.60%, up from 4.45% in July.

The rising borrowing costs have taken a toll on activity in the housing sector, with analysts warning that affordability pressures continue to weigh on demand.