The Bank of England’s (BoE’s) latest Money and Credit report showed that mortgage approvals slipped slightly in August, down to 64,700 from 65,200 in July, bringing three months of growth to an end.
Remortgaging approvals dropped by 900 to 37,900, and net borrowing of mortgage debt by individuals fell by £0.2bn to £4.3bn.
Net borrowing of consumer credit stayed flat at £1.7bn.
Net borrowing by large businesses increased, with private non-financial corporations borrowing £5.9bn in August, up from £0.4bn in July.
The annual growth rate for borrowing by large businesses reached 8.6%, while borrowing by small and medium-sized enterprises (SMEs) rose to 1.2%, the highest level since August 2021.
The net flow of sterling money (M4ex) was £10.9bn in August, up from £6.7bn in July.
Households added £5.4bn to their holdings, private non-financial corporations added £0.6bn, and non-intermediate other financial corporations added £5.0bn.
Net sterling lending to households and businesses also rose to £10bn in August.
Reaction:
Nathan Emerson, chief executive of Propertymark:
“Continued economic uncertainty and a traditionally quieter period during the summer holidays, alongside anxiety over the UK Government’s upcoming budget and decisions being made on interest rates, have perhaps contributed towards this decrease in mortgage approvals.
“However, the Bank of England’s freeze on interest rates last week will contribute to future confidence and stability in the mortgage market now that people on variable mortgages and those looking to finance their next home move have additional reassurance of static rates for now.
“We now look to November, which is when the next interest rate decision will be made.
“It is important that consumers monitor upcoming mortgage deals, as they can vary significantly given current economic circumstances.”
Mark Harris, CEO of mortgage broker SPF Private Clients:
“With mortgage approvals falling only slightly in August, the underlying resilience of the housing market is in evidence despite many challenges facing it.
“The effective interest rate paid on new mortgages fell to 4.26 per cent in August and since then, we have seen some lenders trim their mortgage rates further.
“However, with the rate on the outstanding stock of mortgages increasing slightly to 3.89 per cent, affordability remains a concern for many.
“Remortgaging numbers have also dropped, suggesting that borrowers may be sticking with their existing lender and refinancing rather than going through the hassle of another mortgage application with a new lender.”
Tomer Aboody, director at specialist lender MT Finance:
“The ongoing uncertainty with regard to the upcoming Budget is inevitably resulting in buyers and sellers adopting a ‘wait and see’ approach.
“Despite cheaper borrowing rates, transactional levels remain stunted.
“This further underlines the case for the Chancellor taking action to reduce or reform stamp duty in order to allow the market to really start to function effectively, which in turn will help strengthen the wider economy.”
Stephanie Daley, director of partnerships at Alexander Hall:
“While mortgage approvals have dipped slightly on a monthly basis this is almost certainly down to summer seasonality and the broader picture remains one of resilience, with activity consistently holding above the 60,000 threshold for well over a year.
“This level of consistency highlights that underlying buyer demand is strong, and recent incentives, such as the decision to make the Mortgage Guarantee Scheme permanent and adjustments to loan-to-income caps, are helping to improve accessibility and affordability across the market.
“At the same time, major lenders have already started to respond with more flexible criteria, enabling more buyers to secure the finance they need.
“Looking ahead, the outlook for the remainder of the year remains positive, and we expect these supportive measures to underpin continued buyer activity.”
Jonathan Samuels, CEO at Octane Capital:
“A marginal month on month dip in approval numbers suggests that buyer appetites remain robust, however, the challenge facing the market at present isn’t a lack of intent on the side of homebuyers, but this intent translating into action.
“We’re simply not seeing buyers commit which has led to a surplus of stock and, as a result, sellers are finding transaction timelines increasingly lengthy and fraught with potential pitfalls.
“This has driven an increase in fall-throughs, with many buyers and sellers seeing chains collapse at the eleventh hour.
“In these circumstances, we’ve seen a growing number of residential sellers turn to the specialist finance sector to secure bridging loans, helping them to protect their onward purchase and keep transactions on track.
“This highlights the critical role that specialist lending plays in today’s market, providing the flexibility and certainty required to overcome obstacles that the mainstream mortgage process often cannot resolve.”
Colby Short, co-founder and CEO of GetAgent:
“Mortgage approvals dipped slightly in August, putting an end to three straight months of upward growth.
“However, a seasonal slowdown in mortgage market activity is hardly surprising given the distraction of the summer sun and the school holidays, which tend to slow productivity across many areas of life.
“The broader picture, however, remains one of consistency and with an improving mortgage landscape offering more products, sharper rates, and greater flexibility, demand is being well supported.
“The latest hold on the base rate will only help to steady the ship as we head into a traditionally busy time of year, leaving the market well positioned for a late surge to the finish line in 2025.”
