Summary
Purchase approvals fell to 53,443 in September, the lowest since December 2023, as new mortgage rates hit 4.63%. However, remortgaging jumped to 42,600 and business borrowing doubled, with a base rate rise widely expected on 5 November.
UK mortgage approvals for house purchases fell to 53,443 in September, the lowest monthly figure since December 2023. Purchase approvals were down about 19% on a year earlier and below the recent six-month average of 58,800. Higher borrowing costs are a key driver: the effective interest rate on newly drawn mortgages rose to 4.63% in September from 4.60% in August, as rates rose in response to the conflict in the Middle East.
Remortgaging moved the other way. Approvals for remortgaging rose to 42,600 in September from 34,000 in August.
Household credit is also cooling. Net consumer credit borrowing fell to £1.9bn from £2.7bn, although consumer credit was still up 9.8% on a year earlier, the fastest annual pace since April 2018. Business borrowing, by contrast, picked up: non-financial businesses borrowed a net £9.3bn from banks and building societies in September, double the £4.7bn in August.
The rate outlook adds pressure. In September the Bank of England held the base rate at 3.75%. KPMG UK’s Katie Clinton said the falling approvals reflect continued strain on household finances, with inflation outpacing private sector pay growth.
A slower purchase market usually means longer sales timelines and more broken chains. That increases demand for chain-break bridging, auction finance and short-term funding while buyers wait for mortgage offers.
Source
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- The Independent UK(opens in a new tab)independent.co.uk