BusinessQuiet 46d · day 46
UK mortgage approvals hit 32-month low as Iran war drives up borrowing costs
August saw just 54,918 mortgage approvals, the lowest since December 2023, as rising energy prices and interest rate expectations squeeze homebuyers.
What to know
- UK mortgage approvals hit 54,918 in August—a 32-month low and the lowest since December 2023—as higher borrowing costs linked to the Iran war deterred homebuyers.
- The effective interest rate on new mortgages rose to 4.6% in August, and average five-year fixed rates hit 5.94%, their highest since October 2023, as financial markets shifted from expecting rate cuts to rate hikes.
- Experts expect Bank of England rate increases in November and February, warning mortgage rates will remain near 5% through 2027, further suppressing housing demand beyond the impact of government first-time buyer schemes.
“The mortgage market has come under significant pressure since the Middle East conflict intensified earlier this year. Quoted rates on new mortgages have risen from around 4% to 5% over the past six months.”
Matt Swannell, Chief economic adviser, Item Club · Evening Standard ↗
Katie Clinton Head of financial services advisory, KPMG UKMatt Swannell Chief economic adviser, Item ClubLucian Cook Head of residential research, SavillsPaul Dales Chief UK economist, Capital EconomicsSimon Gammon Managing partner, Knight Frank FinanceBank of England Central bank issuing mortgage data
The record 3 articles and posts · last 30 days