UK Mortgage Approvals Fall to 61,013 in December, Lowest Since Mid-2024

LONDON — UK mortgage activity hit a significant cooling point in late 2025, as net mortgage approvals for house purchases fell to 61,013 in December, according to the latest Bank of England data. This 4.8% monthly decline marks the lowest level of approval activity since June 2024, comfortably missing market expectations of roughly 64,800. While the drop reflects a typical year-end seasonal slowdown and lingering uncertainty following the Autumn Budget, a modest rise in remortgaging and lower effective interest rates suggest the housing market may be preparing for a recovery in early 2026.

According to the Reuters report, the reading was the weakest in 18 months and cast doubt on expectations for a rapid housing market recovery in early 2026. While the number of approvals for house purchases dipped, the 'effective' interest rate—the actual interest paid on newly drawn mortgages—decreased by 5 basis points to 4.15%, its lowest level since January 2023. This easing of borrowing costs has yet to translate into higher transaction volumes, as Trading Economics notes that consumer caution remains high following the expiration of temporary tax breaks.

In contrast to the cooling purchase market, remortgaging activity showed slight resilience, with approvals rising by 1,600 to 38,400 in December. However, total consumer credit growth remained steady at 8.2% year-on-year, indicating that while the property market is flagging, broader household borrowing has not yet contracted. Analysts suggest that while the December dip is partly seasonal, the scale of the miss indicates that the market is still recalibrating to the current interest rate environment and fiscal policy changes.