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Mortgage Approvals Are Falling: What Borrowers Should Do Before The Market Slows
Talk To A Specialist Speak To Us On WhatsAppUK mortgage lending activity drops sharply as higher borrowing costs begin to affect buyer confidence.
The UK housing market has received another important warning signal after the latest Bank of England figures showed mortgage approvals falling to their lowest level since the end of 2023.
During May, lenders approved just 56,205 mortgages for house purchases, representing a 14.9% fall from April and significantly below market expectations. Remortgage approvals also fell sharply, suggesting existing homeowners are becoming more cautious as well as prospective buyers.
For anyone planning to buy a home, refinance an existing mortgage or invest in property, the latest figures reinforce one important message: waiting for the "perfect" market may not be the best strategy.
Mortgage Approvals Have Fallen More Than Expected
According to the latest Bank of England Money and Credit data, approvals for new house purchases fell from over 66,000 in April to just over 56,000 in May.
The decline was considerably larger than economists had forecast and represents the lowest monthly approval figure since December 2023.
The slowdown was not confined to purchase mortgages.
Approvals for remortgaging with a different lender dropped from around 51,200 to 33,300, highlighting that many homeowners are delaying refinancing decisions as borrowing costs remain elevated.
Although one month's figures do not define an entire housing market, approvals are widely regarded as one of the earliest indicators of future property transactions because they measure lending before purchases actually complete.
In other words, today's approval data often becomes tomorrow's housing market activity.
Why Are Mortgage Approvals Falling?
Several factors appear to be influencing borrower behaviour simultaneously.
Mortgage pricing increased during the spring after financial markets adjusted expectations around future Bank of England interest rate cuts.
While many lenders have reduced selected mortgage products during recent weeks, borrowers applying during May were still facing higher average borrowing costs than earlier in the year.
The Bank of England reported that the average interest rate on newly drawn mortgages increased from 4.08% to 4.22% during May. Net mortgage borrowing also slowed considerably compared with previous months.
Alongside higher mortgage costs, continued geopolitical uncertainty, persistent inflation concerns and wider economic caution have all contributed to weaker buyer confidence.
Does This Mean The Housing Market Is About To Slow?
Not necessarily.
Housing markets rarely move in a straight line, and monthly lending data can be volatile.
Some economists have pointed out that the underlying trend remains healthier than the headline figure suggests, with the three-month average of approvals remaining above 62,000.
However, approval numbers are clearly showing that buyers are becoming more selective.
Rather than rushing into purchases, many are taking longer to secure finance, comparing lenders more carefully and reassessing affordability.
For sellers, estate agents and developers, fewer mortgage approvals today could translate into lower transaction volumes later in the summer if the trend continues.
Why Borrowers Shouldn't Assume Waiting Will Save Money
Whenever approval numbers weaken, many prospective buyers adopt a "wait and see" approach.
Unfortunately, that strategy does not always produce better outcomes.
Mortgage pricing can move quickly.
If inflation remains stubborn or financial markets become volatile again, lenders could increase pricing even if the Bank of England keeps base rates unchanged.
Equally, if property transaction volumes fall, lenders may compete harder for high-quality borrowers, creating opportunities for those who are well prepared.
No one can accurately predict which scenario will develop.
That is why securing advice early is often more valuable than attempting to time the market perfectly.
Remortgage Borrowers Should Review Their Options Early
The sharp fall in remortgage approvals is particularly noteworthy.
Many homeowners appear to be delaying refinancing decisions despite fixed-rate products ending throughout 2026.
Leaving a mortgage review until the final few weeks before a deal expires can significantly reduce the number of available options.
Many lenders now allow new mortgage products to be reserved several months before completion, allowing borrowers to secure today's pricing while still benefiting if cheaper products become available before completion.
For borrowers approaching the end of a fixed-rate period, early planning may provide greater flexibility than waiting until the last minute.
Estate Agents And Developers Should Expect More Selective Buyers
The latest approval figures also have implications for professionals operating within the property industry.
Lower lending volumes typically mean buyers become more cautious about affordability, survey issues and mortgage conditions.
Properties priced realistically and marketed effectively may continue attracting strong interest, while overpriced properties could take longer to sell.
Developers may also find that purchasers increasingly require specialist lending advice where affordability becomes more complex.
Helping buyers understand their finance options early in the process may become increasingly important if market conditions soften further.
Specialist Advice Matters More In Slower Markets
Periods of slower mortgage activity often highlight the difference between simply obtaining a mortgage and structuring finance correctly.
Many borrowers now have access to specialist lenders offering solutions for:
- Complex income structures
- Company directors
- Self-employed applicants
- Buy-to-let investors
- Portfolio landlords
- UK expats
- Foreign nationals purchasing UK property
- High-net-worth borrowers
- Large or complex property transactions
A broader view of the market can often uncover solutions that are unavailable through a single bank or high street lender.
How Willow Private Finance Can Help
At Willow Private Finance, we work with borrowers across the UK and internationally to arrange residential mortgages, remortgages, buy-to-let finance and specialist lending solutions.
Whether you're purchasing your next home, refinancing an existing property, investing in property or navigating a complex income structure, we provide whole-of-market advice tailored to your circumstances.
If mortgage approvals continue to fall, preparing your finance early could provide greater flexibility, stronger negotiating power and access to a wider range of lending options.
Planning A Mortgage When Approval Levels Are Falling
In this market update, Bank of England figures showed purchase mortgage approvals falling to their lowest level since the end of 2023, while remortgage approvals also dropped sharply. For buyers and homeowners, this reinforces the importance of reviewing affordability, lender criteria and mortgage options before market conditions change again.
If you are buying a home, approaching the end of a fixed-rate deal, self-employed, a company director or dealing with more complex income, our Residential Mortgage Guide explains how specialist advice can help you understand your options and prepare with confidence.
Read Our Residential Mortgage GuideFrequently Asked Questions
Why have UK mortgage approvals fallen?
Mortgage approvals fell primarily because higher borrowing costs have affected affordability and confidence. Although some mortgage rates have reduced recently, many borrowers applying during May were still facing higher interest rates than earlier in the year. Wider economic uncertainty has also encouraged some buyers to delay moving.
What are mortgage approvals?
Mortgage approvals represent the number of home loans formally approved by lenders before a property purchase completes. They are widely regarded as one of the most reliable leading indicators of future housing market activity because they reflect buyer demand before sales are finalised.
Why are mortgage approvals important?
Approvals often provide an early indication of the direction of the property market. If approvals increase, it usually suggests more transactions are likely to complete in the coming months. Conversely, falling approvals can indicate slowing buyer demand and fewer future property sales.
How many mortgage approvals were recorded in May 2026?
According to the latest Bank of England figures, lenders approved 56,205 mortgages for house purchases during May 2026, representing a 14.9% fall compared with April and the lowest monthly figure since the end of 2023.
Why did remortgage approvals also fall?
Many homeowners appear to be delaying refinancing decisions while hoping mortgage rates will reduce further. Others may be waiting until closer to the end of their current fixed-rate deal before reviewing their options. However, leaving a remortgage until the last minute can sometimes reduce the number of products available.
Does a fall in mortgage approvals mean house prices will fall?
Not necessarily. Mortgage approvals are only one indicator of market activity. House prices are influenced by numerous factors including housing supply, employment levels, wage growth, interest rates, consumer confidence and regional demand. Lower approvals may reduce transaction volumes without causing significant price falls.
Is now a bad time to buy a property?
There is no universal answer. Every buyer's circumstances are different. If you have found the right property and can comfortably afford the repayments, delaying purely in anticipation of lower rates or lower prices may not always be beneficial. Mortgage advice can help you understand your options based on your own financial situation.
Should I wait for mortgage rates to fall further?
While mortgage rates have started to ease in some areas of the market, no one can accurately predict future pricing. Rates could continue to fall, remain stable or increase if economic conditions change. Many lenders allow borrowers to secure a mortgage several months before completion, providing a degree of protection while retaining flexibility if products improve.
How early should I start looking for a remortgage?
Ideally, you should begin reviewing your mortgage around six months before your current deal expires. Many lenders allow new rates to be reserved well in advance, giving borrowers greater choice and helping avoid reverting to a lender's Standard Variable Rate (SVR).
What happens if I do nothing when my fixed-rate mortgage ends?
If you take no action, your mortgage will usually transfer automatically onto your lender's Standard Variable Rate (SVR). This rate is often significantly higher than fixed-rate products and could result in substantially higher monthly repayments.
Could lenders tighten their lending criteria if approvals continue to fall?
Potentially. If market conditions weaken further, some lenders may become more cautious, particularly for higher loan-to-value borrowing or more complex applications. Equally, some lenders may compete more aggressively for lower-risk borrowers. Lending policy can change quickly depending on wider economic conditions.
Will first-time buyers be affected?
First-time buyers are often among the most sensitive to higher mortgage rates because affordability is usually tighter. However, many lenders continue to offer competitive products, higher loan-to-value mortgages and schemes designed specifically for first-time buyers.
What does this mean for home movers?
Home movers may find that buyers become more selective, which can increase the importance of obtaining a mortgage agreement in principle before making an offer. Having finance arranged early can strengthen your negotiating position and reduce delays.
What does this mean for buy-to-let landlords?
Lower mortgage approvals may reduce competition in some parts of the housing market, potentially creating opportunities for investors. However, landlords should also monitor mortgage pricing, rental demand and affordability when reviewing investment decisions.
Should property developers be concerned?
Developers often monitor mortgage approval data closely because lower approvals can lead to fewer property transactions over subsequent months. However, demand remains strong in many regional markets, particularly where housing supply remains constrained.
What is an Agreement in Principle (AIP)?
An Agreement in Principle, sometimes called a Decision in Principle (DIP), is an indication from a lender of how much they may be prepared to lend based on an initial assessment of your circumstances. It can strengthen your position when making an offer on a property but does not guarantee a full mortgage offer.
Can I secure a mortgage before I find a property?
Yes. Many borrowers obtain an Agreement in Principle before they begin house hunting. This helps establish a realistic budget and demonstrates to estate agents and sellers that you are a serious buyer.
Can specialist mortgage brokers access more lenders than going directly to a bank?
Often, yes. Independent whole-of-market brokers can typically access a much broader range of lenders than an individual bank can offer, including specialist lenders that may consider more complex circumstances.
Who can benefit from specialist mortgage advice?
Specialist advice may be particularly valuable for:
- Self-employed borrowers
- Company directors
- Contractors
- Portfolio landlords
- Buy-to-let investors
- High-net-worth individuals
- UK expats
- Foreign nationals buying UK property
- Borrowers with complex income
- Clients purchasing high-value or unusual properties
How can Willow Private Finance help?
Willow Private Finance provides independent, whole-of-market mortgage advice across residential mortgages, remortgages, buy-to-let finance, bridging finance and specialist lending solutions. We work with UK residents, expats, foreign nationals, property investors and high-net-worth clients to structure finance that reflects their individual circumstances and long-term objectives.
Important Notice
Your property may be repossessed if you do not keep up repayments on your mortgage.
The information contained within this article is provided for general information purposes only and does not constitute financial, mortgage or legal advice. Mortgage availability, lending criteria and interest rates are subject to change. Individual circumstances vary, and professional advice should always be obtained before making financial decisions.
Sources
This article has been prepared using information from the sources below, together with Willow Private Finance's analysis of the potential implications for UK borrowers, homeowners, landlords, developers and property professionals.
The Times
Mortgage approvals fall to lowest level since end of 2023 (30 June 2026)
The Times reported on the latest Bank of England Money and Credit statistics, highlighting that mortgage approvals for house purchases fell by 14.9% during May 2026 to 56,205—the lowest monthly figure since December 2023. The article also covered the sharp decline in remortgage approvals, the impact of higher mortgage rates on buyer confidence, commentary from RBC Capital Markets and Pantheon Macroeconomics, and the potential implications for the UK housing market.
Bank of England
Money and Credit – May 2026 Statistical Release
https://www.bankofengland.co.uk/statistics/money-and-credit
The Bank of England's official Money and Credit release provides the underlying data used throughout this article, including mortgage approvals, remortgage approvals, net mortgage borrowing, consumer credit and effective mortgage interest rates. Mortgage approval statistics are widely regarded as one of the earliest indicators of future housing market activity.
UK House of Commons Library
Housing Market: Economic Indicators
https://commonslibrary.parliament.uk/research-briefings/sn02820/
The House of Commons Library provides independent analysis of UK housing market trends and explains why mortgage approvals are considered a leading indicator of future property transactions. It also places the latest Bank of England figures into historical context and compares them with previous months and previous years.
Trading Economics
United Kingdom Mortgage Approvals
https://tradingeconomics.com/united-kingdom/mortgage-approvals
Trading Economics summarises the latest Bank of England mortgage approval data, including market expectations, historical comparisons, effective mortgage rates and remortgage activity. The data was used to provide additional context surrounding the latest lending trends.
Editorial Note
This article is intended for general information only and reflects market conditions, lending data and industry commentary available at the time of publication. It should not be regarded as financial, mortgage, tax or legal advice. Mortgage availability, lender criteria, interest rates and housing market conditions can change without notice. Before making any financial or property-related decision, you should seek professional advice based on your individual circumstances.
