LONDON, Jan 30, 2026 — Mortgage approvals across the United Kingdom have fallen to their lowest level since mid-2024, according to new figures released by the Bank of England, underscoring continued pressure on the housing market amid higher borrowing costs.
The data revealed a decline in approvals for house purchases in December, suggesting subdued activity as households grapple with elevated interest rates and affordability constraints.
Economists say the slowdown reflects cautious sentiment among buyers, many of whom are waiting for clearer signals on future monetary policy before committing to long-term loans. Although inflation has eased compared to peak levels seen in previous years, borrowing costs remain significantly above pre-pandemic norms.
Property analysts note that while house prices have not collapsed, growth has stalled in many regions. Estate agents report fewer first-time buyers entering the market, particularly in London and the South East, where property values remain high relative to income.
Financial institutions have adjusted lending criteria, maintaining stricter affordability assessments to manage risk. Fixed-rate mortgage deals, though more stable than variable-rate options, remain costly compared to historical averages.
Housing charities warn that reduced mortgage accessibility may push more households into the private rental sector, intensifying competition and sustaining upward pressure on rents.
Government officials acknowledged the data but emphasized signs of broader economic resilience. “We recognize the challenges facing prospective homeowners,” a Treasury spokesperson said, adding that long-term housing supply reforms remain a priority.
Construction firms have also reported slower project pipelines, reflecting cautious developer sentiment. Analysts suggest that prolonged weakness in approvals could weigh on the construction sector and related industries.
However, some economists believe the market may stabilize later in 2026 if inflation continues to moderate and the Bank of England signals a gradual easing of rates. Much will depend on wage growth, consumer confidence, and global economic conditions.
For now, the figures paint a picture of a housing market adjusting to a new financial environment — one shaped by tighter credit and more deliberate buyer decision-making.
