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Mortgage approvals for house purchases fell in September to their lowest level since December 2023, according to new data from the Bank of England, in a sign that the housing market was cooling before the autumn. Net approvals for house purchases fell to 53,400 in September, down from 54,800 in August and below the six-month average of around 58,800. It was the third monthly fall in a row, suggesting that demand from buyers was weakening as the year went on.
Remortgage approvals moved in the opposite direction, rising to 42,600 from 34,000 in August, as more homeowners looked to fix a new deal before their current mortgage ended. Net mortgage borrowing fell to £3.9 billion from £4.2 billion in August, while gross lending, the total amount lent to homebuyers, was £24.2 billion. The effective interest rate on newly drawn mortgages rose slightly to 4.63 percent from 4.60 percent, reflecting the cost of borrowing for new buyers.
Businesses also borrowed more in September. Net borrowing by non-financial businesses rose to £9.3 billion from £4.7 billion in August, as companies took on more debt to fund investment and working capital. The rise suggests that businesses were more willing to borrow, even as households became more cautious about taking on a mortgage.
The Bank of England publishes its Money and Credit data each month, and the figures are watched closely as a guide to the health of the housing market and the wider economy. Mortgage approvals are a leading indicator, because they show how many people are in the process of buying a home, and they tend to move ahead of house prices and completions. A fall in approvals suggests that activity will be weaker in the coming months, although the market can recover quickly if conditions change.
For homebuyers, the September figures show a market in which fewer people are moving, but those who are remortgaging are acting promptly to secure a deal. With mortgage rates still higher than they were a few years ago, many buyers are waiting for rates to fall or for house prices to ease before they commit. Lenders will be watching the data closely, as the number of approvals affects their business and the wider housing market.
Source: Bank of England
