Mortgage approvals dropped in December

Latest data from the Bank of England data has shown that net mortgage approvals for house purchase fell by 3,100 to 61,000 in December 2025. By contrast, approvals for remortgaging rose by 1,600 to 38,400 in December.

Net borrowing of mortgage debt by individuals remained unchanged when compared to November at £4.6 billion in December.

The data also showed that net borrowing of consumer credit by individuals decreased to £1.5 billion in December from £2.1 billion in November. Within this, net borrowing through credit cards was £0.7 billion in December, down from £1.0 billion in November. Net borrowing through other forms of consumer credit (such as car dealership finance and personal loans) decreased in December, to £0.8 billion from £1.2 billion.

Melanie Spencer, Growth Director at Target Group, said “A significant drop in mortgage approvals in December shouldn’t be too much of a surprise, particularly when you factor in the usual seasonal lull, along with a very late Budget. This created a pent-up demand which is already starting to work its way through as many parts of the market report a positive start to 2026. Transactions remained pretty stable in December, showing that while many had put their plans on ice in the run-up to the Budget, there was those still making moves – likely out of a need rather than a want.

“Likely buoyed by the base rate cut in December and predictions of both two more cuts and improving inflation, lenders have been very active in this early part of the year. While some affordability and deposit pressures remain, the lending landscape is in good health with high levels of product choice – particularly in high LTV brackets. Lenders will continue to fill their pipeline for the coming year and look to meet their own lending targets and ambitions for market share. It comes as reports suggest that affordability is on course to return to more manageable levels. It means that barring any economic of geopolitical shock – which is an increasing threat in the current climate – we should be in store for a really positive year.

“Given the current factors in play at home and abroad – along with increasing choice at the higher end of the mortgage market – there’s no doubt that lenders need to stay vigilant. Not only does it place greater importance on efficient, scalable and tech-enabled solutions and processes, but it places fresh emphasis on servicing and ensuring that lenders have the right capabilities in place – either in-house through digital transformation or outsourced to the right partners.”

Simon Webb, managing director of capital markets and finance at LiveMore, said “Net mortgage borrowing remaining steady and approvals falling by 3,100 in December is disconcerting given we were expecting the market to pick up in the wake of the Autumn budget; but the base rate cut that came in mid-December should give borrowing a boost when January figures are released.

“Approvals for remortgaging are up, however, by 1,600 – and that figure only captures remortgages with a different lender.

“This remortgaging trend is expected to continue, according to the 2026 mortgage market forecast from UK Finance, and bring with it serious affordability concerns for many borrowers moving from an historically low pandemic rate to a current rate. For borrowers approaching or in retirement, this issue is even more pertinent, given the affordability challenges that already exist for the age group. At LiveMore, we believe many of these challenges can be addressed by using lending models that take a more holistic view of income and are designed to support brokers in identifying appropriate mortgage solutions for their clients. ”