UK Mortgage Approvals Hit Lowest Level Since 2023

The Bank of England reported that mortgage approvals for house purchases fell to 54,918 in August, marking the lowest level since December 2023. This decline coincided with an increase in the effective interest rate on new mortgages, which rose to 4.6% from 4.45% in July. Remortgaging approvals also dropped to 34,000 during the same period.

Market analysts link the slowdown to affordability pressures and volatility stemming from the Iran conflict, which has contributed to higher inflation and mortgage rates.

In contrast to the housing market slump, unsecured consumer lending to households reached a record high, increasing by £2.464 billion in August. This surge exceeded economist expectations and indicates that households are relying more heavily on personal loans and credit cards to manage the cost of living. Despite the increase in borrowing, household deposits with banks and building societies grew by £4.7 billion in August.