Bank of England figures show 54,918 mortgages approved for house purchases in August, the fewest since December 2023, as rates on new loans rose for a second month.
The number of mortgages approved for buying a home has fallen to its lowest level in 32 months, according to Bank of England figures published on 29 September.
Lenders approved 54,918 mortgages for house purchases in August, down from 55,928 in July and below the 56,000 analysts had expected. It was the second monthly fall in a row and the lowest total since December 2023. Approvals for remortgaging also slipped, to 34,000 from 34,600.
The figures cover approvals, which are mortgages agreed but not yet drawn down, and are watched as an early signal of where the housing market is heading. Net mortgage lending, the money actually paid out minus repayments, rose in August to £4.4 billion from £4.1 billion in July, reflecting deals agreed in earlier months.
Borrowing costs rising again
The fall comes as the cost of new mortgages climbs. The Bank’s data shows the average interest rate on newly drawn mortgages rose to 4.60% in August, from 4.45% in July. The average rate across all outstanding mortgages edged up to 4.00% from 3.97%.
Rates have been pushed up since the conflict in Iran began in late February, which lifted oil and energy prices and fed through to inflation. Hopes of further cuts to Bank Rate have faded. On 17 September the Bank’s Monetary Policy Committee held Bank Rate at 3.75%, but three of its nine members voted to raise it to 4%. Its next decision is due on 5 November.
Katie Clinton, head of financial services advisory at KPMG UK, said: “A further fall in mortgage approvals in August points to affordability pressures continuing to weigh on housing demand, as the shocks from the Iran conflict push up both inflation and mortgage rates.”
Simon Gammon, managing partner at Knight Frank Finance, said that “buying activity weakened through the summer as rising energy prices pushed up borrowing costs”, adding that lending to homebuyers was down 15% on August last year.
What buyers are paying
Figures from Moneyfacts put the average two-year fixed mortgage at 5.93%, the highest since July 2024, and the average five-year fix at 5.94%, the highest since October 2023.
Kent buyers are borrowing against higher prices than the national average. HM Land Registry figures show the average Kent home sold for £346,904 in July, up 1.5% on a year earlier, against £293,000 for England as a whole. The average price paid by first-time buyers in Kent was £284,956.
As an illustration, a buyer borrowing 90% of that first-time buyer average, about £256,500, on a 25-year repayment mortgage at the 5.93% average two-year rate would pay around £1,640 a month. At 4.45% the same loan would cost about £1,420.
New help for first-time buyers
The figures were published three days after the government announced a new scheme, Your First Home, for first-time buyers in England. Buyers would put down a 2.5% deposit, with a government-backed equity loan covering 20% of the price and an initial interest-free period. It will apply only to new-build homes from developers that sign up, with household income caps and local price caps that have not yet been set. Full details, including costs and a start date, are due at the Budget later this month.
Paul Dales, chief UK economist at Capital Economics, has said that mortgage rates staying above 4.5% for most of 2027 are likely to have a bigger effect on the market than the new scheme.
Key information
- Mortgage approvals for house purchase, August 2026: 54,918 (July: 55,928)
- Lowest since: December 2023
- Remortgage approvals: 34,000 (July: 34,600)
- Net mortgage lending: £4.4 billion (July: £4.1 billion)
- Average rate on new mortgages: 4.60% (July: 4.45%)
- Bank Rate: 3.75%, next decision 5 November 2026
- Average Kent house price, July 2026: £346,904 (first-time buyers: £284,956)
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Sources
- Bank of England — Money and Credit, August 2026 (published 29 September 2026)
- Bank of England — Effective interest rates, August 2026
- Bank of England — Monetary Policy Summary, September 2026
- HM Land Registry — UK House Price Index, Kent, July 2026
- GOV.UK — UK House Price Index summary: July 2026
- GOV.UK — New first-time buyer scheme to be confirmed at Budget (26 September 2026)
- PropertyWire — UK mortgage approvals fall to 32-month low in August (Moneyfacts rates, KPMG, Knight Frank Finance and Capital Economics comment)
- RTTNews — UK Mortgage Approvals Fall To 32-Month Low (July figure and consensus forecast)