Home loan approvals fall for third month in row

Mortgage approvals fell for the third month in a row in a further sign of weakening in the housing market.

Data from the Bank of England shows a drop in home loans to 53,400 last month, down from 54,800 in August.

The figure is also below the six-month average of around 58,800, according to the Bank’s Money and Credit release.

Mortgage borrowing decreased to £3.9billion from £4.2billion, below the six-month average of £4.9billion.

The ‘effective’ interest rate paid on new mortgages increased to 4.63% from 4.60%. The rate on existing mortgages was 4.03% up slightly from 4%.

Meanwhile, approvals for remortgaging with a different lender increased to 42,600 in September, from 34,000 the previous month.

Industry reaction

Simon Gammon, Managing Partner at Knight Frank Finance, says: “Housing market activity continued to soften through September as mortgage rates climbed.

“Inflation rose to 3.5% during the month, while expectations of a prolonged period of elevated energy prices due to the conflict in the Middle East pushed swap rates higher, prompting lenders to reprice their mortgage products. Lenders’ margins remain extremely thin, leaving them particularly sensitive to changes in the inflation outlook.

“The low-key Budget was a positive, with government borrowing costs edging lower following the Chancellor’s speech. This stability removes one important source of uncertainty for the housing market.”

Slowdown

John Phillips, Chief Executive at Just Mortgages and Spicerhaart, says: “A slowdown in approvals in September really typifies the challenges facing the market, as buyers, sellers and lenders respond to what the Chancellor described yesterday as ‘global economic storms’.

“Rate volatility remained a key characteristic of the market in September. While we managed to see somewhat of a bounce in buyer registrations and valuation requests in September and into October, we know the market is still mainly made up of those needing to make moves, rather than necessarily wanting to. I think the jump in remortgage activity certainly helps demonstrate this.

“While I’m sure there has been an element of wait and see with the Autumn Budget, the hope is that now it is out the way, we see the release of some pent-up demand. I’m sure the news on the Your First Home scheme will undoubtedly help generate interest as that schemes gets set to launch.”

Stubbornly subdued

Anthony Codling, MD Equity Research at RBC Capital Markets, says: “UK mortgage approvals for house purchase fell to 53,443 in September 2026, down 2.5% month-on-month and down a rather more troubling 19.4% year-on-year.

“This marks the third consecutive monthly decline, an unwelcome hat-trick, making Halloween for housebuilders more trick than treat, and takes approvals to their lowest level since December 2023.

“The current run-rate sits 10.8% below the five-year average and 16.9% below the ten-year average, pointing to demand that remains stubbornly subdued. The value of approvals fell even faster, down 4.9% month-on-month and 17.7% year-on-year to £13.7bn.

“The UK housing market is not a market with positive momentum, happy Halloween.”

Lenders report mortgage numbers down, with only slight upturn ahead