Mortgage approvals hit three-year low

Mortgage approvals for house purchases fell to their lowest level in nearly three years, with the Bank of England reporting 53,443 approvals in September. This follows a rise in mortgage rates linked to the ongoing Middle East conflict. Meanwhile, remortgaging approvals increased to 42,600 from 34,000 in August.

Net borrowing of mortgage debt by individuals decreased to £3.9 billion in September, from £4.2 billion in August, below the previous 6-month average of £4.9 billion.

Mortgage repayments also increased, rising to £21.4 billion from £20.2 billion in August. This was slightly above the six-month average of £21.3 billion.

Consumer credit use also fell, with net borrowing dropping to £ 1.9 billion, the lowest in three monthsm this was down from £2.7 billion in August, slightly below the previous 6-month average of £2.1 billion. Within this, net borrowing through credit cards was £0.7 billion in September, down from £1.3 billion in August. Net borrowing through other forms of consumer credit (such as car dealership finance and personal loans) decreased to £1.2 billion in September, from £1.4 billion in August. 

John Phillips, CEO of Just Mortgages and Spicerhaart, said “A slowdown in approvals in September really typifies the challenges facing the market, as buyers, sellers and lenders respond to what the Chancellor described yesterday as ‘global economic storms’. Rate volatility remained a key characteristic of the market in September. While we managed to see somewhat of a bounce in buyer registrations and valuation requests in September and into October, we know the market is still mainly made up of those needing to make moves, rather than necessarily wanting to. I think the jump in remortgage activity certainly helps demonstrate this.

“While I’m sure there has been an element of wait and see with the Autumn Budget, the hope is that now it is out the way, we see the release of some pent-up demand. I’m sure the news on the Your First Home scheme will undoubtedly help generate interest as that schemes gets set to launch. Even if the scheme helps enable brokers to engage positively with prospective clients or encourage them to open the door and seek advice, I’d count that as a real win. While the scheme has its sceptics, there’s a real opportunity to view it as the gateway to a broader conversation around the full range of options that are available right now to make homeownership a reality.

“As we head towards the end of the year, brokers will need stay proactive and remain visible, using all the tools at their disposal to give clients confidence and help them navigate this changing market.”

Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said “Remortgage activity saw a significant resurgence in September, approvals soared to 42,600, up from 34,000 in August. This is the strongest level seen since the rush of activity earlier in the year, of 50,077 in April 2026, a clear indication of why remortgaging is a key focus for borrowers coming off cheap fixed-rate deals. The Bank of England approval data only captures remortgages with a different lender, so not product transfers, which could be a quick and easy option. Borrowers would be wise to seek advice to consider their options sooner than later. Even if they ultimately decide to stay with their existing lender, it’s still important to take time to compare other deals first.

“House purchase approvals fell in September to 53,400, down from 54,800 in August and below the average of around 58,800 over the previous six months. The continued decline suggests a subdued market, with many borrowers potentially delaying their plans amid uncertainty surrounding the path of future interest rates and wider economic conditions. If the Bank of England’s Monetary Policy Committee (MPC) provides more certainty surrounding interest rates next week, it could calm future rate pricing on loans.

“First-time buyers with a sizeable deposit might be able to find a more affordable home due to weaker house prices, but higher mortgage rates risk undermining that affordability boost. The average mortgage repayment for a borrower with a 5% deposit has soared by £147 per month, or £1,764 per year, since November 2025. This is based on a £250,000 mortgage over 25 years, on the average two-year fixed mortgage rate at 95% loan-to-value, at 6.38% vs 5.41%.”