Weekly Real Estate News
Mortgage approvals for home purchases in Britain fell to their lowest level in nearly three years in September, according to new Bank of England figures, adding to evidence that higher borrowing costs are suppressing the housing market. Remortgaging activity, meanwhile, moved sharply in the opposite direction.
The central bank reported approximately 53,400 net approvals for house purchases in September, down from 54,800 in August and below the recent six-month average of 58,800. The detailed data show 53,443 approvals, the lowest monthly total since December 2023. The figures were released October 29 and describe mortgage decisions made in September, not October transactions.
Higher rates weigh on buyers
The effective interest rate on newly drawn mortgages rose to 4.63% in September from 4.60% in August, the Bank of England said. The average rate on the existing stock of mortgages increased to 4.03% from 4.00%.
These effective rates measure interest actually paid on loans rather than advertised offers. They reflect borrowers entering new loans or rolling off earlier fixed-rate deals, so changes can continue even when a central bank has not changed its policy rate during a particular month.
The decline in purchase approvals suggests that more households are either delaying home purchases or failing to secure acceptable financing. Approvals are a forward-looking indicator of mortgage activity, but they are not the same as completed property sales and may be canceled before a transaction closes.
Britain’s housing market has been under pressure from elevated mortgage costs and broader inflation concerns. The fall in September approvals occurred before the government’s October 28 Budget confirmed detailed terms for a new first-time buyer equity-loan program, which is not scheduled to begin financing purchases until April 2027.
Remortgaging jumps as existing borrowers reset
Approvals for remortgaging rose to 42,600 in September from 34,000 in August. The Bank of England’s remortgaging series generally captures borrowers switching to a different lender, rather than every product transfer completed with an existing lender.
That distinction matters. A rise in approvals for remortgaging does not necessarily indicate a refinancing boom driven by lower interest rates. It may also reflect borrowers whose fixed-rate arrangements are expiring and who are shopping for new terms in a more expensive lending market.
Net mortgage borrowing declined to £3.9 billion from £4.2 billion in August, below the preceding six-month average of £4.9 billion. Secured gross lending edged up to £24.2 billion from £23.7 billion, while mortgage repayments increased to £21.4 billion from £20.2 billion.
Because the net lending and gross lending figures use different seasonal adjustment approaches, the Bank cautions that subtracting repayments from gross advances will not necessarily reproduce the published net figure.
Household borrowing shows a mixed picture
The central bank also reported that net consumer credit borrowing fell to £1.9 billion in September from £2.7 billion in August. Yet the annual growth rate of outstanding consumer credit increased to 9.8% from 9.7%, indicating that slower borrowing in a single month has not ended the longer-running increase in unsecured debt.
For housing professionals, the central development is the divergence between weaker purchase approvals and stronger remortgage approvals. It points to a market in which existing homeowners are actively managing their debt while prospective buyers remain constrained by prices and financing costs.
The Bank of England’s Money and Credit release is the primary source. Its next scheduled update, covering October activity, is due November 30. The figures will help show whether the fall in purchase approvals continued into the fourth quarter.
