Mortgage approvals for house purchases fell to 54,900 in August, their lowest level since December 2023, while the effective rate on newly drawn mortgages rose to 4.60%, Bank of England figures confirm.
The monthly release shows approvals slipping from 55,900 in July and remortgaging approvals falling from 34,600 to 34,000. The rate paid on new mortgages rose by 15 basis points in one month, despite Bank Rate remaining unchanged at 3.75%.
Landlords weighing a purchase or refinance face a quieter lending backdrop without an automatic cut in funding costs. The Bank’s headline data covers all household mortgages rather than buy-to-let alone, but it points to the conditions from which lender appetite, valuation confidence and fixed-rate pricing are formed.
Mortgage approvals lose ground in August
House-purchase approvals were below the preceding six-month average of around 60,100. They are approvals net of cancellations, so are watched as an indicator of future mortgage borrowing and, by extension, the near-term sales market.
Net borrowing secured on homes increased to £4.4 billion from £4.1 billion in July, although that remained below the previous six-month average of £5.2 billion. The contrast matters: borrowers added more debt overall, but fewer buyers received new approvals.
Gross secured lending fell to £23.6 billion from £25.3 billion, while repayments eased to £20.4 billion from £21.1 billion. Those movements are not a verdict on one month’s landlord demand, yet they make it harder to argue that a broad recovery in mortgage activity is already under way. A slower sales market can also affect the exit assumptions behind a landlord’s purchase or disposal plan.
This follows Residential Landlord’s coverage of Santander’s August buy-to-let rate cuts, when lender competition briefly improved purchase pricing. It also follows its report that buy-to-let remortgages rose while purchase lending fell. August’s Bank figures show that the wider mortgage market has since lost some momentum as the cost of new debt moved higher.
New mortgage rates rise despite a steady Bank Rate
The Bank’s effective rate is the rate actually paid on newly drawn mortgages, rather than an advertised best-buy. It rose from 4.45% in July to 4.60% in August. The effective rate on outstanding mortgages edged up from 3.97% to 4.00%.
Buy-to-let fixes are priced from lenders’ funding costs, swap markets, fees and rental-stress calculations rather than Bank Rate alone. That means a flat decision from the Monetary Policy Committee does not guarantee a cheaper refinancing window. Investors close to a refinancing date should check product expiry dates and affordability assumptions rather than rely on a rate expectation formed earlier in the summer.
The reduction in remortgaging approvals also needs care in interpretation. The series only captures borrowers switching to a different lender, so it does not count product transfers with an existing lender. It is still a useful signal that fewer households completed a lender change in August.
The Bank of England’s August Money and Credit release gives the full lending, approvals and effective-rate data. Its next monthly release is due on 29 October.
Opinion
The August numbers are a warning against treating a stable Bank Rate as a settled borrowing market. Lower approvals and higher new-mortgage rates point in the same direction: margins still need to withstand a tougher refinancing offer. A landlord’s next decision should be based on the rate available now, not the one that seemed likely a few weeks ago.
