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UK mortgage approvals hit 32-month low as fixed rates climb

Moneyfacts data shows the average five-year fixed mortgage rate rose to 5.9%, the highest since October 2023.

Reported · Written up by our desk · Economy

UK mortgage demand fell to a 32-month low in August as fixed borrowing costs rose, with activity hit by higher rates linked to the war in Iran, according to data reported by the Bank of England and summarized by The Guardian Business.

Just 54,918 mortgages for new home purchases were approved in August, seasonally adjusted, the lowest monthly total since December 2023, while the average five-year fixed mortgage interest rate reached 5.94%, its highest since October 2023, and two-year fixed mortgages stood at 5.93%.

The Guardian Business also attributed the shift to mortgage rates rising since the war began in late February, alongside higher oil prices and reduced expectations of interest rate cuts.

Simon Gammon, managing partner at Knight Frank Finance, said that buying activity weakened through the summer as rising energy prices pushed up borrowing costs, and that lending to homebuyers fell.

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