Mortgage activity slowed in May as both borrowing and home purchase approvals declined, according to the latest figures from the Bank of England, pointing to softer demand in the housing market.
Net borrowing of mortgage debt by individuals fell to £2.9bn in May, down from £4.4bn in April and the lowest monthly total since May 2025. Mortgage approvals for house purchases also dropped to 56,200, below the average of 63,300 recorded over the previous six months.
The slowdown extended to the remortgage market, with approvals falling sharply to 33,300 from 51,200 in April.
Meanwhile, net consumer credit borrowing remained broadly stable at £1.7bn. Borrowing on credit cards eased to £0.6bn, while borrowing through personal loans and car finance increased to £1.1bn.
Lucian Cook, head of residential research at Savills, commented: “After a couple of unexpectedly robust months for mortgage approvals that have sat at odds with other weaker housing signals, May’s figure provides something of a reality check.
“That said, over the past month we’ve seen competition return to the mortgage market alongside an easing in headline fixed rates, which should relieve some affordability pressure for new buyers.
“This should limit the extent of any associated house price falls, though the wider economic outlook continues to suggest a subdued housing market over the remainder of 2026. Savills forecast expects that mainstream house prices will fall by 2% this year, with growth expected to pick back up again in 2027.”
Verona Frankish, CEO of Yopa, believes a decline in mortgage approvals is unlikely to dampen the wider recovery her agency is seeing across the housing market.
She said: “Monthly variation is expected and the housing market rarely moves in a straight line.
“The bigger picture remains encouraging. We’ve seen demand strengthen steadily this year, supported by more competitive mortgage rates and a growing sense of stability. Buyers have become far more willing to press ahead with their plans, recognising that waiting for cheaper borrowing costs may no longer be worthwhile.
“While approval numbers may ebb and flow, the underlying market remains resilient. With lenders continuing to compete for business and expectations of further monetary easing still in place, we’re confident buyer activity will remain healthy throughout the second half of the year.”
Gareth Lewis, deputy CEO of specialist lender MT Finance, believe the latest mortgage data is a sign of what is happening at this moment in time.
He commented: “At the beginning of the year, approval numbers started to pick up quite nicely, which is why April was a much more impressive month compared with May as that came through in the wash. We are now seeing the ramifications of the interest rate environment becoming unstable again and the impact this is having on transactions.
“There urgently needs to be some stimulus for the housing market, with the government needing to do something to encourage transactions and activity, which will also benefit the wider economy. Talk of the removal of stamp duty has been mooted but it remains to be seen whether that would make a real difference. Volatile funding rates are the real issue at the moment; while everything pointed towards a lower interest rate environment this year, the impact of war in the Middle East has since changed this outlook.”
Jeremy Leaf, north London estate agent, added: “Mortgage approvals are arguably the most important of all the housing market data, as they are forward, rather than backward facing, so are a reliable indicator of future activity.
“On the ground, we are finding it is not just the numbers which are down, but the time genuine buyers are taking before playing their mortgage offer card.
“Concerns remain about the direction of travel for mortgage rates and the cost of living which is delaying decision making as the war in Iran drags on. Looking forward, we expect more of the same at best particularly now that
political uncertainty is adding to this caution.”