Residential mortgage approvals decreased to 53,400 in September, down from 54,900 in August and below an average of around 58,800 over the previous six months, the latest Bank of England figures show.
Approvals for remortgaging with a different lender increased to 42,600 in September, from 34,000 in August, suggesting that borrowers are shopping around for better deals as mortgage rates continue to rise.
The ‘effective’ interest rate on newly drawn mortgages increased to 4.63% in September, from 4.60% in August. The rate on the outstanding stock of mortgages also rose to 4.03% in September, up from 4.00% in August.
Net borrowing of mortgage debt by individuals decreased to £3.9bn in September, from £4.2bn in August, and below the previous six-month average of £4.9bn.
Secured gross lending increased slightly to £24.2bn in September, up from £23.7bn in August, but still below the six-month average of £26.3bn. Repayments increased slightly in September to £21.4bn, from £20.2 billion, slightly above the six-month average of £21.3bn.
Lucian Cook, head of residential research at Savills, commented: “Mortgage approvals fell to their lowest level since the end of 2023 in September and have remained below 60,000 for five consecutive months. This is a direct reflection of increases we have seen in fixed rate mortgage costs.
“This has brought a renewed sense caution to the housing market, with buyers having to rein in their budgets and aspirations to move.
“The market is likely to remain turgid until we see inflation brought under control and talk of interest rate rises return to talk of interest rate cuts. That points to continued modest downward pressure on prices in the short term and a relatively low transaction market next year.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Mortgage approvals fell again in September and remain below the six-month average, illustrating the concerns and difficulties facing buyers. It is hoped that the Your First Home scheme which is coming in the spring will give the housing market some welcome stimulus, and encourage would-be first-time buyers - who are so important to the overall health of the market - to get on the ladder.
“The effective interest rate paid on new mortgages jumped again to 4.63% while the rate on the outstanding stock of mortgages edged up to 4.03%. On the ground, the pricing picture is mixed, with some lenders increasing rates while others have been trimming them in an effort to attract business. Increased expectations of a base rate rise at the November meeting of the Monetary Policy Committee will do nothing to improve affordability for those on variable rate mortgages.
“Borrowers who need a mortgage in coming months should consider locking into a product as soon as they can to protect themselves from potential rate rises in the short term."
Richard Pike, chief sales and marketing officer at Phoebus Software, commented: “Mortgage approvals have been losing momentum throughout 2026, so a further decline in September reinforces this is a market struggling to gain traction.
“It has been a challenging year so far for the mortgage market, with approvals year-to-date around 8% down on the same period last year. People are still moving home, but against a backdrop of economic uncertainty and continued affordability pressures, buyers are being cautious about committing to a purchase.
“The government’s new Your Home scheme should help encourage more first-time buyers into the market once launched, but it will take time for this to feed through into activity.
“Until buyers feel more confident about the cost of borrowing and their wider financial position, it is difficult to see a sustained recovery in the housing market.”
Nathan Emerson, CEO of Propertymark, added: “It’s disappointing, yet understandable, to see net mortgage borrowing dip month on month, as we currently find ourselves in an overall unfavourable economic climate. However, it is welcome to see positivity when looking at the volume of approvals for remortgaging when compared to the month previous.
“The housing market has been navigating a myriad of challenges, including inflation, which currently sits at 3.5%, and an overall mortgage market that has rapidly withdrawn many previously attractive mortgage products.
“Buyers are currently treading a cautious path in the face of what is a demanding housing market in many regions. However, as announced in yesterday’s Budget, the Chancellor’s Your First Home scheme provides optimism for many first-time buyers hoping to take their first steps onto the housing ladder."
