The UK's mortgage market experienced a notable slowdown in May, with official figures from the Bank of England revealing a decline in both borrowing by individuals and approvals for new home purchases. This cooling trend suggests a potential easing of demand within the broader housing sector, following what some analysts described as unexpectedly robust activity in earlier months this year.
Net borrowing of mortgage debt by individuals saw a significant drop, falling to £2.9 billion in May. This marks a decrease from £4.4 billion in April and represents the lowest monthly total recorded since May 2025. Concurrently, mortgage approvals for house purchases also declined, reaching 56,200. This figure is notably below the average of 63,300 approvals observed over the preceding six months, indicating a reduction in the number of prospective buyers securing financing for property transactions. The slowdown was not limited to new purchases, as the remortgage market also saw a sharp decline in approvals, falling to 33,300 from 51,200 in April.
While the Bank of England data points to a dip in activity, experts hold varying outlooks. Lucian Cook, head of residential research at Savills, described May's figures as a 'reality check' after a couple of strong months. He noted, however, that increased competition among lenders and an easing of headline fixed mortgage rates in the past month could alleviate some affordability pressures for new buyers. Savills currently forecasts a 2% fall in mainstream house prices this year, with growth expected to resume in 2027. This context is crucial for first-time buyers navigating an already challenging market, as well as existing homeowners considering remortgaging or selling.
Conversely, Verona Frankish, CEO of Yopa, expressed confidence that the decline in approvals is unlikely to derail the wider recovery her agency is witnessing. She highlighted strengthening demand this year, supported by more competitive mortgage rates and a growing sense of stability, suggesting that buyers are becoming more willing to proceed with their plans. Gareth Lewis, deputy CEO of specialist lender MT Finance, attributed the data to the current interest rate environment, which he described as having become unstable again. He suggested that government stimulus, potentially including a review of stamp duty, might be needed to encourage transactions and activity.
The impact on the housing market remains a key concern for many. For first-time buyers, fluctuating mortgage rates and affordability pressures continue to be significant hurdles, even with some competitive offerings returning to the market. Existing homeowners might find their property values softening, particularly if the Savills forecast holds true. Landlords could also face challenges if buyer demand remains subdued, affecting portfolio growth or sales. The broader economic outlook, including ongoing geopolitical events, continues to influence lender behaviour and consumer confidence, making the trajectory of the housing market for the remainder of 2026 uncertain.