Mortgage approvals to home buyers drop to lowest level in year-and-a-half

The number of mortgage approvals made to home buyers fell to its lowest level in a year-and-a-half in December, according to Bank of England figures.

Some 61,013 mortgage approvals for house purchase were recorded in December 2025, which was down from 64,072 the previous month, and the lowest level since 60,920 approvals in June 2024.

Finance and property experts said they expect to see momentum rebuilding in the months ahead, now that uncertainties around last year’s autumn Budget are out of the way.

Thomas Pugh, chief economist at audit, tax and consulting firm RSM UK said: “The drop in mortgage approvals to 61,013 is consistent with weak momentum in the housing market in (the fourth quarter of 2025), which is unsurprising given the uncertainty generated by the Budget.

“However, now that there is some certainty around property taxes, interest rates were cut in December, and are likely to be cut again in April, the housing market should rebuild some momentum this year, especially as there is likely to be a degree of pent-up demand from the weakness in (the fourth quarter.”

Rob Wood, chief UK economist at Pantheon Macroeconomics said: “We think there is a good chance that approvals will trough in December or perhaps January before recovering through 2026.”

Frances McDonald, director of research at Savills, said of the housing market: “With lower mortgage rates and a reduced likelihood of any further changes to the property tax system, we expect more stability for both activity and prices throughout this year.”

The Bank’s Money and Credit report also said that approvals for remortgaging rose by 1,600 to reach around 38,400 in December. The figures only capture remortgaging with a different lender.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “As we move towards spring, the good news for borrowers is that lenders are keen to lend and have the funds available to do so.

“Many of the big lenders have reduced their mortgage rates and while some have increased pricing in recent days, we expect rates to jump around, rather than significantly move one way or another.

“Remortgaging numbers rose, suggesting that borrowers coming off low rates are shopping around for the best rate possible rather than opting for the ease of sticking with their existing lender.”

Looking at non-mortgage borrowing, the annual growth rate for consumer credit remained at 8.2% in December, which was unchanged from November.

Within this figure, the annual growth rate for credit card borrowing increased to 12.4% from 12.1%, the highest since January 2024, when it was 12.5%.

Households also deposited an additional £4.8 billion, with banks and building societies in December, falling from £8.8 billion in November.

Mark Hicks, director of active savings, Hargreaves Lansdown said: “Christmas often takes a bite out of savings, so there’s no surprise that new savings fell back, after growing for the previous three months.

“It’s not just Christmas though, people will also take cash out in order to pay their tax bill in the run-up to deadline for self-assessment at the end of the January. We can expect this trend to have lasted through January before savings build towards the tax year end again.”

Looking at business borrowing, the report said that, in December, UK non-financial businesses borrowed, on net, £1 billion from banks and building societies, including overdrafts, following net borrowing of £6.2 billion in November.

The figures were released as a separate report from HM Revenue and Customs (HMRC) said around 100,440 home sales took place in December, which was 5% higher than December 2024 and “marginally” lower (less than 1%) than in November 2025.

Karen Noye, a mortgage expert at wealth manager Quilter said: “Both the Bank of England Money and Credit statistics and HMRC’s property transaction data point to a housing market very much in a holding pattern.”

Nicky Stevenson, managing director at Fine & Country, said: “Our agents are continuing to report solid inquiry levels, especially when the seller has taken realistic pricing advice.

“We are seeing more people looking to sell at the moment, and with greater choice across many parts of the country, buyers have more options than they did in recent years.

“However, we are also seeing that once a buyer has found the right property, they are willing to move quickly. That considered approach is helping sustain transaction levels even during what is a traditionally tricky month for moving.”