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Mortgage approvals for home purchases edged lower in August, according to the latest data from the Bank of England.
The figures revealed that 64,680 loans were approved for buyers during the month, a slight dip from the 65,161 approvals recorded in July.
The slowdown was not limited to house purchases alone. The Bank’s report also highlighted a fall of around 900 remortgage approvals, though the data only accounts for borrowers switching to a different lender rather than those staying with their existing one.
Commenting on the figures, Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, suggested that the quieter summer period may have had an impact. With many households away on holiday, she noted, buyer activity naturally softened.
Haine added that the fall in approvals hints at a market losing a little momentum, particularly as it adjusts to the winding down of the temporary stamp duty relief and anticipates changes from the upcoming autumn Budget.
She explained that higher borrowing costs have already forced buyers to be more cautious, while sellers are increasingly having to set more competitive asking prices. The result has been slower house price growth as both sides negotiate harder to make transactions affordable.
Simon Gammon, managing partner at Knight Frank Finance, also weighed in on the situation. He observed that most borrowers appear to have adapted to the current level of interest rates, suggesting resilience at a broad level.
However, Gammon pointed out that in the upper tiers of the market, uncertainty about potential tax changes is causing hesitation. Wealthier buyers, he said, are sometimes delaying purchases until they have greater clarity on government policy, which could make the final months of the year less active for high-value transactions.
Additional insights from property website Zoopla also supported the view that demand is cooling, particularly for homes priced over £500,000. The company reported a noticeable reduction in enquiries for more expensive properties in recent weeks.
Richard Donnell, Zoopla’s executive director, said that the combination of higher mortgage costs and a fragile economic outlook was leading many buyers to pause their decisions. In his words, speculation around Budget announcements is already weighing on confidence in the upper end of the market.
Lucian Cook, head of residential research at Savills, echoed this sentiment. He explained that August’s weaker approvals underscore how finely balanced the housing market remains. Even though interest rate cuts have begun, they have not yet translated into a meaningful uplift in buyer confidence.
Cook stressed that anxiety about what measures might be announced in the Budget is disproportionately affecting the top of the market. Normally, he said, higher-value transactions would lead a recovery, but that has not been the case this time.
Nathan Emerson, chief executive of Propertymark, the professional body for estate agents, added that a mix of factors likely contributed to the fall in approvals. Beyond the Budget speculation, he pointed to the broader economic climate, interest rate uncertainty and the natural seasonal lull over the summer.
He noted that this combination of influences has left some households cautious about committing to a purchase, even though underlying demand for homes remains present across much of the country.
Taken together, the August data paints the picture of a housing market that is steady but subdued. Buyers are pausing for reflection, sellers are tempering expectations, and the autumn Budget is looming as a key moment that could shape the direction of the market in the months ahead.
Jeremy Leaf, a north London estate agent, commented that most property transactions are still going ahead despite the current uncertainty. He noted, however, that some sellers remain overly ambitious and may need to be more realistic when it comes to pricing their homes.
Beyond the housing market, the Bank of England’s latest Money and Credit report provided a wider view of consumer borrowing. It revealed that overall net borrowing of consumer credit was steady at £1.7 billion in August.
Breaking the figures down, borrowing through credit cards dipped slightly, while borrowing via other types of consumer credit – such as car finance agreements, personal loans, and instalment plans – saw a small rise.
Karim Haji, global and UK head of financial services at KPMG, highlighted the broader challenges households are facing. With the energy price cap set to increase from October and inflation still high, particularly for everyday essentials like food and utilities, he warned that household budgets will be under further strain just as colder weather drives up heating costs.
In terms of savings, households managed to increase deposits with banks and building societies by £5.4 billion in August. This followed an even larger net increase of £7.1 billion in July, showing that many families are still prioritising putting money aside despite financial pressures.
Mark Hicks, head of active savings at Hargreaves Lansdown, explained that while the pace of saving eased slightly, households still added substantial amounts to their accounts. He pointed out that interest rates of around 4.5% remain attractive, offering both security and the potential for inflation-beating returns.
The report also provided insight into borrowing by UK businesses. In August, non-financial companies borrowed £3.2 billion in net loans from banks and building societies, including overdraft facilities. This compared with £5.3 billion in net borrowing recorded in July.
Large businesses continued to increase their reliance on external finance. The annual growth rate of borrowing among bigger firms rose to 8.6% in August, up from 8.1% in July, suggesting that demand for credit remains strong at the corporate level.
Small and medium-sized enterprises (SMEs) also saw a modest increase in their borrowing activity. Growth in lending to SMEs rose to 1.2% in August, its highest rate since August 2021, when it was last recorded at 1.3%.
Although the pace of borrowing remains far lower for smaller firms than for larger ones, the figures suggest that confidence is slowly improving among SMEs, with more of them willing to take on loans to fund operations and investment.
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