Mortgage Approvals Fall to Their Lowest Since December 2023 — What It Means for Buyers

Fewer people in Britain were approved for a mortgage to buy a home in September than in any month for nearly three years. The Bank of England’s latest Money and Credit release, published on 29 October, shows lenders approved just 53,443 mortgages for house purchase in September — down from 54,814 in August and the lowest total since December 2023.

The fall was slightly bigger than economists expected in a Reuters poll, and it marks the third monthly decline in a row. The value of approvals fell even faster: down 4.9% on the month and 17.7% on the year to £13.7bn, according to analysis of the Bank’s data by RBC Capital Markets.

Before we get to what this means for you, a quick but important distinction: mortgage approvals are a leading indicator. They measure lending decisions taken in September — not completions. They tell us about demand pipeline and buyer confidence, not about where prices are today. Transactions, which HMRC confirmed fell 4% to 94,000 in September, are the lagging number.

Here is what the data shows, why it happened, and what it means if you’re thinking of buying.

September’s numbers at a glance

• 53,443 mortgage approvals for house purchase in September, down from 54,814 in August — the lowest since December 2023, and the third consecutive monthly fall.
• Approvals are down roughly 19% on a year earlier, and the current run-rate sits about 11% below the five-year average, per RBC Capital Markets.
• Net mortgage lending — which lags approvals — fell to £3.866bn, its lowest since May.
• The effective interest rate on newly drawn mortgages edged up to 4.63%, from 4.60% in August.
• Meanwhile, remortgage approvals rose to 42,600, up from 34,000 in August — households racing to refix before rates climb further.
• Unsecured lending to households grew 9.8% year-on-year, the sharpest annual pace since April 2018 — sometimes a sign of stretched household finances.

Why approvals fell: rates, confidence and affordability

There is no single culprit — it’s a combination of higher borrowing costs and weaker confidence.

Rising mortgage rates. The average five-year fixed mortgage rate has hit 5.99%, with two-year deals at 5.97%, according to Moneyfacts — the first time in around three years that the five-year fix has touched the 6% barrier. Swap rates, which drive fixed-rate pricing, have been pushed up by volatility in bond markets linked to the US-Iran conflict. Lenders don’t need the Bank of England to move first: quoted rates are already rising.

A rate rise that looks near-certain. Financial markets treat a rise in Bank Rate from 3.75% to 4% at the Bank of England’s 5 November meeting as close to certain, with some traders pricing as many as four rises before next summer. When a move looks that baked in, banks tend to tighten affordability checks and lift refix rates quickly — and borrowers with applications in flight can see their numbers change mid-process.

Weak consumer confidence. Britain’s longest-running consumer sentiment gauge recorded its biggest drop since the Covid pandemic in October, and retail sales slowed sharply in September. When households feel nervous about the economy, big financial commitments get postponed — and few commitments are bigger than a house purchase.

Stretched affordability. Nationwide’s October data showed annual house price growth slowing to just 0.5% — the weakest in nearly three years — while the budget watchdog forecasts mortgage repayments rising to their highest share of household income since 2009 over the next five years. The maths simply doesn’t work for as many buyers as it did a year ago.

That last point is worth underlining: approvals aren’t falling because people have given up on homeownership. They’re falling because the monthly payment arithmetic has changed. And that shifts the balance of power in the market.

What it signals for buyers: choice, leverage and room to negotiate

Falling demand is bad news for sellers. For buyers with their finances in order, it is close to the best negotiating environment in years. Here’s why:

• You have more choice than in years. Stock levels reached 764,000 homes on 1 October 2026, up from 752,000 a year earlier and the highest for the time of year since 2014. More stock means less competition from other buyers.
• Sellers are getting realistic. The gap between initial asking prices and agreed sale prices stood at 17.5% in late October, per week-42 market stats — and nearly 15% of homes for sale were price-reduced in September, up from 11% in August. Vendors who priced ambitiously are being forced to adjust.
• Time is on your side. With approvals at multi-year lows and transactions down 4%, the frantic pace of 2021 and 2022 is long gone. You can view, think and negotiate without the fear that three other buyers are about to swoop in.
• Negotiation actually works now. In a rising-rate, high-stock market, a well-researched offer below asking price is a credible proposition rather than a provocation. Our guide on how to negotiate a house price down in 2026 walks through the evidence-based tactics that work best in exactly these conditions.
• Know your numbers before you view. With two-year fixes near 6% and no guarantee rates have peaked, stress-test your budget against worse-case scenarios, not today’s best deals. Our free affordability calculator shows what you could realistically borrow and what it would cost each month.

The buyers who do best in this market aren’t the ones who stretch the furthest — they’re the ones who arrive with a clear budget, a mortgage agreement in principle, and the confidence to walk away from an overpriced property.

The honest counter-note: falling demand is not a price collapse

It would be easy to read this data and conclude that prices are about to fall off a cliff. That isn’t what the evidence says — and it’s important to be honest about the other side of the ledger.

First, supply is still constrained. Yes, stock is rising — but 764,000 homes for sale is a steady rebuild from historically low levels, not a flood. Net additional dwellings data and planning constraints mean the UK still builds far fewer homes than it needs.

Second, prices are already adjusting, not collapsing. Nationwide’s 0.5% annual growth and Rightmove’s subdued October figures describe a market gently cooling — asking prices still rising, just more slowly. The price reductions we’re seeing are mostly the removal of froth: asking prices coming back in line with what buyers can pay, rather than completed sale prices tumbling.

Third, lenders aren’t retreating. Remortgage approvals jumped to 42,600 in September — the biggest jump in months. Banks are still lending; they’re just being choosier about affordability, and households are being more cautious about committing.

So the fair reading is this: demand is weak, buyers have leverage, and prices are drifting sideways-to-soft. That’s a very different thing from a crash — and it means the best strategy for buyers is diligence, not opportunism.

What to watch next

Two dates matter from here:

• Thursday 5 November: the Bank of England’s rate decision, announced at midday alongside the Monetary Policy Report. Markets expect Bank Rate to rise from 3.75% to 4% — the first rise in three years. A hike would likely push fixed mortgage rates higher still; a hold would be a genuine surprise and could give buyers a small reprieve.
• 30 November: the Bank’s next Money and Credit release, covering October activity — the first read on whether September’s slump was the start of a trend or a one-off dip.

Also watch the lenders’ indices: Nationwide’s November figures and the next Rightmove index will show whether the softness in asking prices is broadening into agreed sale prices.

The bottom line

Mortgage approvals at a near-three-year low is a clear signal: buyers are retreating, borrowing costs are biting, and confidence is fragile. For anyone house-hunting right now, that translates into more choice, more motivated sellers, and genuine room to negotiate — provided you know exactly what you can afford.

Start with the numbers: run your figures through our affordability calculator, explore the full UK Home Buyer Toolkit for planning tools, and speak to an independent mortgage adviser before you make an offer. In a market like this one, preparation is the real negotiating advantage.