By Karim Hammam
UK mortgage approvals for house purchases fell to their lowest level in nearly three years in September, according to Bank of England data released Thursday.
Approvals Drop Amid Rising Rates
The central bank approved 53,443 mortgages for home purchases in September, the smallest monthly total since December 2023 and down from about 54,900 in August. The decline follows a continued increase in mortgage rates linked to the conflict in the Middle East, with economists expecting further interest rate hikes in the coming months.
Remortgaging and Consumer Credit Trends
Remortgaging approvals moved in the opposite direction, climbing to 42,600 in September from 34,000 in August. Meanwhile, net consumer credit borrowing dropped to £1.9 billion in September, a three-month low, from £2.7 billion in August.
Market Reaction and Rate Outlook
Jason Tebb, president of OnTheMarket, said approvals dipped again in September following falls in July and August, with the effective interest rate on new mortgages rising to 4.63% from 4.6% in August. He noted growing expectations that the Bank of England may raise rates at its November meeting.
Household Finances Under Strain
Katie Clinton, head of financial services advisory at KPMG UK, said the continued fall reflects ongoing strain on household finances, with inflation outstripping private sector pay growth and a base rate increase widely expected.
Regional House Price Divergence
Separate data from Zoopla showed more than a third of UK homes are in postcode areas where property values have fallen over the past year, up from 12% a year earlier. Price declines are concentrated in London and the South East, where 85% of homes are in areas with falling prices, while values are still rising by more than 3% annually in parts of the North West and Scotland.
