UK Mortgage Approvals Hit 18-Month Low, Bank of England Reports

UK Mortgage Market Overview

By David Milliken

LONDON, Jan 30 (Reuters) - British lenders approved the fewest mortgages for house purchase in 18 months in December, according to unexpectedly weak figures from the Bank of England on Friday that cast doubt on expectations of an early recovery in the housing market in 2026.

The BoE said lenders approved 61,013 mortgages in December, the lowest since June 2024, below all forecasts in a Reuters poll of economists that had instead pointed to a small rise to 64,800. November's reading was revised down to 64,072 from the 64,530 first reported.

Current Trends in Mortgage Approvals

Britain's housing market slowed in 2025 after the end of a temporary tax break on some purchases, and there was further loss of momentum before the annual budget on November 26 due to fears of higher taxes on more expensive homes.

Impact of Economic Factors on Housing

"Activity in the housing market remained tepid between the Budget and Christmas, even though the measures announced were predominantly positive," said Simon Gammon, managing partner at Knight Frank Finance.

Future Outlook for Mortgage Transactions

Mortgage lender Halifax reported that house prices rose 0.3% in the 12 months to December - well below the rate of consumer price inflation - and rival Nationwide recorded a 0.6% increase.

However, the Royal Institution of Chartered Surveyors said there were early signs of sentiment turning in December as sales expectations rose to their highest since October 2024. Gammon said there had been signs of buyers increasing in January.

Mortgage approvals typically take place at least a month before a purchase, so the December weakness suggests transactions will not immediately pick up in 2026.

Friday's BoE data showed that consumer borrowing in December was unchanged at 8.2% year-on-year, the fastest since May 2024.

Lending was up 1.542 billion pounds ($2.12 billion) in the month, below November's 2.143 billion pound increase. Economists polled by Reuters had forecast a 1.7 billion pound rise.

December saw a stronger-than-expected pickup in retail sales, up 2.5% on the year. This was the fastest since April 2025 and has boosted some economists' expectations of a recovery in broader growth early this year after a sluggish end to 2025.

($1 = 0.7275 pounds)

(Reporting by David Milliken, editing by Andy Bruce)