UK mortgage approvals hit lowest since January 2024 as housing market weakens

British lenders approved just 56,053 mortgages for house purchase in July, the fewest since January 2024, according to Bank of England data released on Tuesday. The figure came in below every forecast in a Reuters poll of economists, which had pointed to a rise to 59,500.

Housing market under pressure

The Bank of England also revised June's reading up to 58,215 from the 58,200 first reported. The sharp drop in mortgage approvals signals continued weakness in the UK housing market.

Separate data from mortgage lender Nationwide, released earlier on Tuesday, showed house prices rose just 1.6% in the 12 months to August. That is well below the rate of consumer price inflation, meaning homes are becoming less affordable in real terms.

Consumer borrowing jumps

Net unsecured lending to UK consumers rose by £2.006 billion ($2.71 billion) in July, overshooting economists' forecast of a £1.8 billion increase. It was the biggest monthly rise since November 2025.

Ruth Gregory, deputy chief UK economist at Capital Economics, said the data shows a weak near-term outlook for the housing market. She added that households may have funded some of their July spending by lowering their saving rate and borrowing more. She also said overall monetary conditions are not conducive to a long period of high inflation.

Interest rate outlook

The Bank of England is widely expected to keep interest rates unchanged at 3.75% this month. Financial markets are pricing in a quarter-point increase by the end of the year.

The combination of weak mortgage approvals and rising consumer credit suggests British households are relying more on borrowing to cope with spending pressures. That mix will be closely watched by policymakers as they decide the next move on rates.