British mortgage approvals for home purchases fell to their lowest level in almost three years in September, as higher borrowing costs weighed on housing demand.
Lenders approved 53,443 mortgages, down from 54,814 in August, according to Bank of England figures reported by Reuters on Thursday. The result was below economists’ forecast of 54,000 approvals and marked the weakest monthly total since December 2023.
Net mortgage lending also declined more sharply than expected, falling to £3.866 billion, its lowest level since May. Approvals are an indicator of future borrowing, while lending figures generally reflect transactions further along in the purchase process.
The figures highlight continuing affordability pressures. The average effective interest rate on newly drawn mortgages increased to 4.63% in September, from 4.60% in August, according to reporting by ITV News citing the central bank’s data.
Higher government borrowing costs have fed through to mortgage pricing, adding to the expense of buying a home. Financial markets were also anticipating a possible Bank of England rate increase from 3.75% to 4% at its next meeting, Reuters reported. That expectation does not represent an announced policy decision.
Meanwhile, remortgaging approvals rose to approximately 42,600, from 34,000 in August, showing stronger activity among borrowers switching lenders even as approvals for new home purchases declined.
The slowdown comes alongside broader signs of pressure on household finances, with recent retail sales and consumer confidence indicators pointing to weaker demand. For the housing market, the latest figures underline the continuing influence of borrowing costs on buyers’ ability to proceed.
