Mortgage approvals fall further to lowest since 2023

The number of mortgage approvals made to home-buyers has fallen to its lowest level for almost three years, according to Bank of England figures.

Official figures from the central bank show 53,443 mortgages were approved for house purchases in September.

It marked the lowest monthly figure since December 2023, according to Bank data.

The Bank had reported roughly 54,900 mortgage approvals in August.

The slump comes on the back of a continued increase in mortgage rates linked to the conflict in the Middle East, with economist expecting hikes to interest rates in the coming months.

Meanwhile, approvals for remortgaging increased to 42,600 for the month, rising from 34,000 in August.

Furthermore, the Bank found the use of consumer credit reduced, with net borrowing levels dipping to a three-month low of £1.9 billion in September from £2.7 billion in August.

Jason Tebb, president of OnTheMarket, said: “Approvals for house purchases, a useful measure of market activity and sentiment as they indicate future borrowing, dipped once again in September, following falls in July and August.

“With the effective interest rate on newly-drawn mortgages also increasing again, to 4.63% in September from 4.6% in August, the impact of higher borrowing costs continues to make itself felt.

“The Bank of England’s decision to hold base rate steady so far this year has helped calm concerns, but there are growing expectations that a rate rise is imminent, and may even come next week at November’s meeting.”

Katie Clinton, head of financial services advisory at KPMG UK, said: “The continued fall in mortgage approvals in September reflects the ongoing strain on UK household finances.

“With inflation now outstripping private sector pay growth and with the base rate broadly expected to increase, there is little good news on the horizon.

“Many are having to carefully negotiate daily living costs, so taking on a mortgage will be kicked into the very long grass.”