UK Mortgage Approvals at a Near Three-Year Low

The UK housing market has lost more of its momentum. Figures published by the Bank of England on 29 October 2026 show that net mortgage approvals for house purchases fell to 53,400 in September — the lowest monthly figure since December 2023 and well below the recent six-month average of about 58,800.

Mortgage approvals are the housing market's early warning system. They measure how many buyers have had home loans agreed, which makes them a strong indicator of the lending — and the completions — coming down the pipeline. When approvals slide for months, the market is quietly telling you that fewer buyers are financing purchases. Here is what the September data actually says, and what it means if you are buying, moving or remortgaging.

The headline numbers, in one place

All figures below are from the Bank's September 2026 Money and Credit release (published 29 October; seasonally adjusted):

Measure	September	August	Context
Approvals for house purchases	53,400	54,800	6-month average ~58,800; lowest since December 2023
Approvals for remortgaging (different lender only)	42,600	34,000	Strongest since April 2026
Net mortgage borrowing	£3.9bn	£4.2bn	6-month average £4.9bn; annual growth 3.4%
Effective rate, newly drawn mortgages	4.63%	4.60%	Outstanding mortgage stock: 4.03%
Net consumer credit borrowing	£1.9bn	£2.7bn	Credit-card borrowing £0.7bn, down from £1.3bn
Household deposits	£4.7bn	£4.9bn	Includes £5.0bn paid into ISAs

The September data is a tale of two markets: home-purchase lending is cooling while remortgaging is surging — existing owners are shopping for rates while new buyers hesitate.

Why buyers are pulling back

The core reason is cost. The "effective" interest rate — the rate borrowers actually pay — on newly drawn mortgages rose to 4.63% in September, up from 4.60% in August. That small monthly move matters because it continues the direction: borrowing keeps getting pricier, not cheaper.

Context makes the picture clearer. The Bank of England has held Bank Rate at 3.75%, with inflation at 3.5% in September — still well above the 2% target. The Bank's next decision is due on 5 November, and nothing in the data screams that cheaper borrowing is imminent. Meanwhile, net mortgage borrowing fell to £3.9bn, below the six-month average of £4.9bn, and gross lending barely edged up while repayments rose more quickly — households are paying down debt faster than they are taking new loans on.

Industry analysis reported alongside the release notes that approvals have been losing momentum through 2026, with year-to-date approvals roughly 8% below the same period last year. September's drop was also slightly worse than economists expected (they had pencilled in about 54,000).

The remortgage twist: why one number jumped

While purchase approvals fell, approvals for remortgaging jumped from 34,000 in August to 42,600 in September — the strongest level since April 2026. This does not signal market strength; it signals the opposite. A wave of borrowers is coming off cheap fixed-rate deals taken out years ago and must refinance into a far pricier market, with the effective rate on the existing mortgage stock now 4.03% and rising.

Important nuance from the Bank's figures: this remortgaging number only captures borrowers switching to a different lender. Product transfers — staying with your current lender on a new deal — are not counted, and they are often the quickest and cheapest route for existing homeowners.

If you are buying: five moves worth making

1. Get your mortgage agreed in principle early. In a slower market, sellers take certainty seriously. An agreement in principle strengthens your position even when there are fewer competing offers.
2. Look at the effective rate, not just the headline. The Bank's "effective" rate — the interest actually paid — is the honest number. Fees and arrangement costs change the real cost; a lower headline rate with a big fee is often worse on smaller mortgages.
3. Stress-test your budget for "higher for longer." Build your numbers around rates staying near current levels, not hoped-for cuts. If the payment still works after a further rise, you are buying within your margin of safety.
4. Factor in the 5 November decision. The Bank of England's rate decision lands days after these figures. Watch it — but remember lenders price in expectations in advance, so a single meeting rarely transforms mortgage rates overnight.
5. Note the Budget's buyer support. The Autumn Budget on 28 October included measures aimed at first-time buyers — including a lower Lifetime ISA withdrawal charge for homes above the £450,000 price cap, a new First Time Buyer ISA from April 2029, and the "Your First Home" equity loan scheme for new-builds. None of these change mortgage rates, but they can change how big a deposit you need.

If your fixed deal is ending: what to do

You are not alone — the remortgaging surge shows thousands are in the same position. Start looking three to six months before your deal ends, compare your current lender's retention offer with the wider market, and remember that a product transfer with your existing lender often skips new affordability checks and fees. Independent guidance from the Bank's own data: the market is not rewarding loyalty, so compare before you accept the default.

The wider picture: households pull back on credit, keep saving

The release tells a broader story about household caution. Net borrowing of consumer credit fell to £1.9bn in September from £2.7bn in August — with credit-card borrowing nearly halving to £0.7bn from £1.3bn. Meanwhile, households added £4.7bn to deposits, including £5.0bn paid into ISAs, and the rate paid on new fixed-term deposits rose to 4.42%. People are borrowing less and saving more — a pattern that usually shows up when confidence is fragile and rates are high.

The one part of the release that moved in the opposite direction: UK non-financial businesses borrowed a net £9.3bn, roughly double August's £4.7bn, driven by large firms. Corporate balance sheets are not where the caution is.

Frequently asked questions

Does a low approval number mean house prices will fall?

Not necessarily, but it is a lead indicator of weaker demand. Fewer approved buyers usually means fewer sales agreed, which can soften prices over the following months — especially in areas where sellers are motivated. Prices also respond to supply, so watch local listing data alongside national figures.

Should I wait for rates to fall before buying?

The Bank of England's next decision is on 5 November, but mortgage rates follow markets more than meetings. Waiting for a materially cheaper rate has a cost too: you pay rent in the meantime, and rates may stay elevated while inflation runs at 3.5%. Make the decision on whether the payment is affordable now, not on a rate prediction.

Why did remortgaging approvals jump while purchases fell?

They measure different things. Purchase approvals track new home loans — a demand signal. Remortgaging approvals track existing homeowners switching lenders as old fixed deals expire — a refinancing signal driven by deals coming due, which can rise even when buyer demand is weak.

How does this compare with the US?

UK buyers are paying far less for borrowing than US ones: the effective UK rate on new mortgages is 4.63%, while the US 30-year fixed rate was around 7.3% in late October 2026. But the direction is the same — borrowing costs are high by recent standards in both countries.

The housing market is in a holding pattern: buyers waiting, owners refinancing, savers stockpiling. If you are in the market — buying or remortgaging — the single highest-value step this week is simple: run your own numbers against today's rates, not yesterday's hopes. Prepared buyers can turn a cooling market into negotiating power.