UK Mortgage Approvals Fell to 54,900 in August as New Loan Rates Reached 4.60%

British lenders approved 54,900 house purchase mortgages in August, down from 55,900 in July, while the rate on newly drawn loans rose to 4.60%.

Lenders in the United Kingdom approved 54,900 mortgages for house purchase in August, down from 55,900 in July and below a previous six-month average of around 60,100, the Bank of England reported on 29 September 2026. In the same month the effective interest rate on newly drawn mortgages rose to 4.60%, from 4.45% in July.

Approvals eased while net borrowing rose

The two headline figures point in opposite directions, and that is where the release becomes informative. Approvals are a forward-looking count, because an approval precedes a completion by weeks; net borrowing records money actually drawn down. Net borrowing of mortgage debt by individuals increased to 4.4 billion pounds in August, from 4.1 billion pounds in July. Remortgaging approvals eased too, to 34,000 from 34,600.

The gross flows behind that net figure explain how both can be true at once. Secured gross lending decreased to 23.6 billion pounds in August, down from 25.3 billion pounds in July. Repayments also decreased, to 20.4 billion pounds from 21.1 billion pounds. A larger net number therefore sits on a smaller gross flow in both directions.

New credit costs more than the existing stock

The 4.60% effective rate on newly drawn mortgages is the figure most likely to shape approvals into next year. The effective rate on the outstanding stock of mortgages stood at 4.00% in August. Those two numbers describe different populations of borrowers: the first is what someone signing a loan this month pays, the second is the average across every mortgage already on lenders' books. Because British borrowers overwhelmingly hold fixed-rate deals that expire in cohorts rather than tracking the policy rate day to day, the stock rate moves slowly and lags the new-lending rate for years.

Households kept adding to deposits

Net consumer credit increased to 2.5 billion pounds in August, from 2.1 billion pounds in July, so unsecured borrowing moved the opposite way to house purchase approvals. At the same time, households' deposits with banks and building societies increased by 4.7 billion pounds in the month. A household sector that is borrowing more on cards and loans, saving more, and applying for fewer purchase mortgages is not a sector short of money; it is one deferring the largest decision.

What a credit release does not measure

A monetary and credit release counts loans and prices credit. It does not measure house prices, and the two cannot be converted into one another. For context from our own market data, the average United Kingdom house price on our current row is 367,751 US dollars, which is 272,000 pounds for June 2026, and the average monthly private rent is 1,883 US dollars, or 1,393 pounds for July 2026 - both from the national statistics office, giving a gross yield of 6.15%. Annual price growth on the same row is 2%.

Two caveats belong with those numbers. The price covers all housing transactions, which skews towards houses, while the rent covers the private rented sector, which skews towards flats; they come from one publisher and one bulletin, but not from an identical stock. And the United Kingdom publishes no price per square metre at all, so our per-square-metre figure is a derived estimate rather than a measured one. Our confidence marking on the row is medium for that reason.

So the falling approvals count and our 2% annual price change are not in conflict. One is a monthly tally of loan decisions, the other a year-on-year index of transacted prices. Approvals turn first; prices follow, if they follow at all.

Sources: Bank of England, Money and Credit, August 2026, published 29 September 2026 https://www.bankofengland.co.uk/statistics/money-and-credit/2026/august-2026

Market data: United Kingdom