UK mortgage approvals fall to 54,900 in August as the interest rate on new mortgages rises to 4.60%

The Bank of England published its Money and Credit statistics for August on 29 September 2026. Net mortgage approvals for house purchase, which indicate future borrowing, fell to 54,900 from 55,900 in July, below an average of about 60,100 over the previous six months. Approvals for remortgaging, which only count switches to a different lender, fell to 34,000 from 34,600.

Mortgages

• Net mortgage borrowing: £4.4 billion in August, up from £4.1 billion in July and below the six-month average of £5.2 billion
• Gross lending: £23.6 billion, down from £25.3 billion and below the six-month average of £26.5 billion
• Repayments: £20.4 billion, down from £21.1 billion
• Annual growth in net mortgage lending: 3.6%, unchanged
• Effective interest rate on newly drawn mortgages: 4.60%, up from 4.45% in July
• Effective rate on the stock of mortgages: 4.00%, up from 3.97%

The effective rate is the interest households actually pay, so the 15 basis point rise in a month on new loans shows lenders passing higher funding costs through. At its meeting on 17 September the Monetary Policy Committee noted that two-year fixed mortgage rates were around 95 basis points higher than before the conflict in the Middle East began (report).

Consumer credit and companies

• Consumer credit: net borrowing of £2.5 billion, up from £2.1 billion and above the six-month average of £1.9 billion, of which credit cards £1.2 billion (£0.9 billion in July) and other credit such as car finance and personal loans £1.3 billion (£1.2 billion)
• Annual growth in consumer credit: 9.6%, from 9.3%
• Private non-financial companies: borrowed £7.7 billion net, after close to nothing in July, including £5.7 billion of bank loans
• Sterling money (M4ex): a net inflow of £16.2 billion, against an outflow of £9.8 billion in July

What it means for sterling

Falling approvals and rising consumer credit point the same way: households are leaning on credit while the housing market slows, as mortgage costs climb. Bank Rate is 3.75% and CPI inflation was 3.1% in August (report), and UK GDP growth for the second quarter was revised up to 0.5% (report). The Monetary Policy Committee decides again on 5 November. Live prices: GBP/USD.