UK Mortgage Approvals Hit 32-Month Low in August Amid Rising Costs
UKPulse Property Desk
Mortgage approvals for UK home purchases fell to their lowest level in 32 months in August, with 54,918 approvals recorded. This decline is attributed to rising borrowing costs influenced by geopolitical tensions.
- Just 54,918 mortgages for new home purchases were approved in August, the lowest monthly total since December 2023.
- The effective interest rate on newly drawn mortgages increased to 4.60% in August, up from 4.45% in July.
- Approvals for remortgaging also declined to approximately 34,000 in August from 34,600 in July.
Mortgage approvals for UK home purchases dropped to their lowest level in 32 months during August, according to Bank of England data released on Tuesday. A total of 54,918 mortgages for new home purchases were approved, marking the lowest monthly figure since December 2023.
Rising borrowing costs, influenced by geopolitical tensions, have contributed to this decline. The effective interest rate on newly drawn mortgages increased to 4.60% in August, up from 4.45% in July. Moneyfacts data indicates that the average five-year fixed mortgage rate reached 5.94% on Tuesday, its highest point since October 2023.
Approvals for remortgaging also saw a decrease, falling to approximately 34,000 in August from 34,600 in July. This suggests a softening in refinancing demand, even as many borrowers approach the end of their existing fixed-term rates.
Why this matters: The decline in mortgage approvals and rising borrowing costs indicate ongoing affordability pressures in the housing market.
What this means for you: If you are looking to buy a home or remortgage, you may face higher borrowing costs, as effective interest rates on newly drawn mortgages have increased.