Mortgage approvals for house purchases fell to 56,205 in May, their lowest level since December 2023 and down 14.9% from April’s 66,034, according to the Bank of England’s latest Money and Credit data, as higher borrowing costs and economic uncertainty weighed on activity.

The central bank’s figures show that net mortgage borrowing dropped to £2.9bn from £4.4bn in April and remained well below the six-month average of £5.1bn.

Remortgaging activity also slowed steeply, falling to 33,300 approvals from 51,200 the previous month.

The effective interest rate on newly drawn mortgages rose to 4.22% from 4.08%, while the rate on the outstanding stock of mortgages was unchanged at 3.92%.

Consumer borrowing remained relatively stable at £1.7bn, although credit card borrowing eased and demand for personal loans and other unsecured lending increased. Meanwhile, households continued to build savings, depositing a net £5.4bn into banks and building societies during the month, supported by ISA inflows.

Despite the monthly slowdown, industry commentators agreed that underlying housing demand remains resilient and could strengthen further if interest rates begin to fall later this year.

Emily Hollands, group head of intermediary sales and distribution at Precise, said the decline in approvals should not be viewed as weakening demand, but rather as borrowers taking a more measured approach. She said: “Many borrowers are taking more time to assess affordability and make informed decisions, but the foundations for future activity remain intact.”

Marc von Grundherr, director of Benham and Reeves, echoed the view that buyers remain active despite uncertainty. He said: “Today’s buyers are more pragmatic and decisive and the need to move now outweighs waiting for marginally lower rates. As long as lenders remain competitive and borrowing costs continue to ease gradually, we expect any slowdown in approvals to prove temporary, with buyer demand remaining resilient through the second half of the year.”

Mark Harris, CEO of mortgage broker SPF Private Clients, added: “Mortgage approvals illustrate the difficulties facing buyers, but lender competition means borrowers should move when attractive products become available. Remortgaging numbers also fell, suggesting that borrowers may be opting for the ease of sticking with their existing lender when coming to the end of their current deal, rather than shopping around for a new one with a different lender.”

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