In August, UK mortgage approvals fell to their lowest level in over two years, with only 54,918 new home purchase mortgages approved. This decline is attributed to increased borrowing costs, influenced by the ongoing conflict in Iran, which has also driven up energy prices. The average five-year fixed mortgage interest rate reached 5.94%, the highest since October 2023.
Remortgaging activity also decreased slightly, with approvals dropping to around 34,000. Analysts noted that the rising costs are impacting housing demand, as affordability pressures continue to challenge potential buyers in the market.
With mortgage approvals at a 32-month low, potential buyers should monitor how rising energy prices and interest rates affect housing affordability. Watch for shifts in buyer sentiment and any government interventions aimed at stabilizing the housing market.