Mortgage approvals and lending dip amid pre-Budget speculation: BoE

Net mortgage borrowing fell back to £4.3 billion in October, after a rise to £5.2 billion in September, the latest Money and Credit statistics from the Bank of England show.

Gross lending decreased slightly in October, to £24.5 billion from £24.8 billion. By contrast, gross repayments increased by £1.5 billion to £22.1 billion. 

Net mortgage approvals decreased by 600 to 65,000 and approvals for remortgaging with a different lender fell by 3,600 to 33,100, the lowest since February 2025.

The average interest rate on newly drawn mortgages was 4.17% in October, down from 4.19% in September and the lowest since January 2023 (3.88%), continuing the downward trend observed since March 2025. The rate on the outstanding stock of mortgages remained unchanged for the third consecutive month at 3.89%.

Nathan Emerson, CEO of Propertymark, commented: “Speculation surrounding the Autumn Budget may have played a role in contributing towards a decrease in the number of mortgage approvals during this period. 

“While it is understandable to see a lull regarding mortgage activity on the months leading up to the Chancellor making their fiscal plans known, it is now time to concentrate on ensuring the housing market is fully empowered for already anticipated population growth, via assembling a skilled workforce and supply chain to deliver on housing targets across each nation in what is already demand timeframe to achieve.”

Jeremy Leaf, north London estate agent and former RICS residential chairman, said: “Mortgage approvals provide the best evidence of likely market activity over the next few months, and it’s clear from these figures that speculation about the Chancellor’s Budget took its toll.

“On the ground, we are seeing plenty of resilience and a determination to keep transactions running even though they are becoming more protracted and often subject to some tough renegotiating. Affordability is gradually improving, especially as another, earlier base rate cut is more likely.

“We have often found in similar circumstances that the bigger the pause, the larger the re-set. As a result, we are expecting a rebound over the next few weeks and a more sustained recovery in early 2026 based on what buyers and sellers have been telling us recently."

Simon Gammon, managing partner at Knight Frank Finance, added: "Mortgage approvals for house purchases dipped in October as speculation mounted over which tax rises would be announced in the November budget. The steady drip of policy leaks weighed heavily on sentiment.

"That said, the fall in approvals was small. Monthly transaction activity has been broadly in-line with pre-pandemic levels since the summer, which is a display of resilience given the weakening economy and the uncertain fiscal outlook. Aspects of that uncertainty have now passed and the Bank of England looks on course to cut the base rate in December. This should allow lenders to keep trimming mortgage rates, and we expect some pent up demand to be released as we move into a stronger spring selling season."