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Mortgage lending to home-buyers has dropped to its weakest level in almost three years, Bank of England figures show.
The central bank approved 53,443 mortgages for house purchases in September, which was the smallest monthly total since December 2023, according to the Bank’s data.
The previous month had seen about 54,900 approvals. The decline follows a continued rise in mortgage rates linked to the conflict in the Middle East, with economists expecting interest rate hikes in the coming months.
Remortgaging moved in the opposite direction, with approvals climbing to 42,600 in September from 34,000 in August.
Consumer credit use also fell, the Bank found, with net borrowing dropping to £1.9 billion in September, a three-month low, from £2.7 billion in August.
Jason Tebb, president of OnTheMarket, said: “Approvals for house purchases, a useful measure of market activity and sentiment as they indicate future borrowing, dipped once again in September, following falls in July and August.
“With the effective interest rate on newly-drawn mortgages also increasing again, to 4.63 per cent in September from 4.6 per cent in August, the impact of higher borrowing costs continues to make itself felt.
“The Bank of England’s decision to hold base rate steady so far this year has helped calm concerns, but there are growing expectations that a rate rise is imminent, and may even come next week at November’s meeting.”
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Katie Clinton, head of financial services advisory at KPMG UK, said: “The continued fall in mortgage approvals in September reflects the ongoing strain on UK household finances.
“With inflation now outstripping private sector pay growth and with the base rate broadly expected to increase, there is little good news on the horizon.
“Many are having to carefully negotiate daily living costs, so taking on a mortgage will be kicked into the very long grass.”
More than a third of homes across the UK sit in postcode areas where property values have dropped over the past year, Zoopla has estimated.
The property website put the figure at 35 per cent, up sharply from 12 per cent a year earlier, while many property value falls are concentrated in London and the South East of England.
At a localised level, 85 per cent of homes in London and the South East are estimated to be in postcode areas where prices have fallen.
Elsewhere, values are still climbing by more than 3% annually in some areas, particularly across the North West and Scotland, Zoopla said.
It said annual price growth above 4 per cent is being recorded in postcode areas in Liverpool, Carlisle and Kilmarnock.
Higher mortgage rates have pushed up the cost of buying, according to Zoopla, while buyers have become more selective.
