Agreed sales and fixed rates tell the same story
Mortgage approvals for house purchase fell to 54,900 in August, the lowest level since December 2023, while Zoopla reports agreed sales 9% lower and HMRC recorded a 2% annual fall in seasonally adjusted completions.
The approvals figure was down from 55,900 in July and below the previous six-month average of around 60,100, according to the Bank of England.
Remortgage approvals with a different lender slipped to 34,000 from 34,600, while the effective rate on newly drawn mortgages rose to 4.60% from 4.45%.
Zoopla's figures cover sales agreed in the four weeks to September 20, with the decline recorded in every UK region and country. Stock levels are 5% higher than a year ago, and annual house price growth has slowed to 0.8%.
"Housing sales are slowing in the face of higher mortgage rates adding to the cost of buying a home," said Richard Donnell, executive director at Zoopla.
HMRC's provisional figures put seasonally adjusted residential transactions at 95,220 in August 2026, down from 97,040 a year earlier and 1% below July's 96,650. Non-seasonally adjusted completions were 96,250, 9% lower annually and 11% lower monthly.
HMRC said completions typically follow an initial offer by two to four months. The Bank of England describes approvals as an indicator of future borrowing.
Fixed rates climb through the summer
Zoopla puts the average rate on a 75% loan-to-value, five-year fix at 5.2% at the end of September, up from 4% at the start of 2026, adding around £150 a month to a typical buyer's repayments.
Moneyfacts data shows the average two-year fix at 5.92% and the average five-year fix at 5.94% in late September, compared with 5.59% and 5.63% a month earlier.
Melanie Spencer, growth director at Target Group, said mortgage rates have risen sharply since the start of the Iran conflict, with lenders reacting to volatility in swap rates and the wider economy.
"With completions data always taking a couple of months to catch up, we are seeing a market that is really feeling those higher borrowing costs in a sustained way," she said.
By late July, two- and five-year swap rates had each risen by around 0.22 to 0.23 percentage points in a month, according to Nicholas Mendes, mortgage technical manager at John Charcol, with Halifax, HSBC and Coventry Building Society repricing after renewed escalation in the Middle East.
The Office for National Statistics confirmed inflation rose to 3.1% in August, and Halifax, Nationwide, HSBC and Santander raised mortgage rates in the days before the Bank of England's September decision, some twice in a week.
The Monetary Policy Committee held the base rate at 3.75% on September 17 in a 6–3 vote, its sixth consecutive hold, with three members voting for a rise to 4%. The next decision is due on November 5.
Ryan McGrath, director of second charge mortgages at Pepper Money, said the HMRC figures suggest the market lost some momentum over the summer, which "fits with the caution brokers have been describing for a few months now."
"Many who locked in lower rates a couple of years ago still see little reason to move," he said.
Refinancing pressure on brokers' pipelines
At the start of 2026, UK Finance forecast that 1.8 million fixed-rate mortgages would end during the year and expected external remortgaging to rise by 10%.
Those forecasts were made when the average two-year fix stood at 4.83% and the five-year at 4.91%.
Budget date draws closer
Spencer said speculation around the Budget, particularly on property taxes, stamp duty and a new equity loan scheme, has left buyers "caught between rushing to complete or lock in a deal or sitting on their hands until they know what they're dealing with."
The government's new equity loan scheme, Your First Home, would give first-time buyers in England a 20% government equity loan with a 2.5% deposit, and Chancellor John Healey is expected to confirm details at the Autumn Budget on October 28. SAM Conveyancing has urged the Treasury to include existing homes.
Nathan Emerson, chief executive of Propertymark, said "attention will naturally turn to what measures may be announced to support homebuyers and sellers" with the Budget approaching. He added that support for first-time buyers would be particularly welcome.
Year-to-date and commercial figures
Residential completions for April to August reached 486,950 non-seasonally adjusted and 488,540 seasonally adjusted, around 10% and 11% above the same period of 2025-26.
That earlier period included a sharp fall in April 2025, after buyers brought sales forward ahead of stamp duty land tax threshold reductions.
Non-residential transactions were broadly stable at 10,220 seasonally adjusted, while unadjusted completions fell 17% monthly and 5% annually to 9,080, the lowest August figure since 2020.
