Falling mortgage approvals reflect a market in wait-and-see mode

Mortgage approvals for house purchases fell to their lowest level since December 2023 in May, dropping to 56,200 from 66,000 in April, according to Bank of England data published on Monday.  

The figure sat below the six-month average of 63,300 and marked the weakest reading in 17 months, prompting brokers to warn a combination of elevated rates, cautious buyers, and media-driven anxiety is weighing on market momentum.

Approvals for remortgaging with a different lender fell sharply too, dropping to 33,300 from 51,200 in April. The effective interest rate on newly drawn mortgages rose to 4.22% from 4.08% the previous month, while net borrowing of mortgage debt fell to £2.9 billion from £4.4 billion – well below the six-month average of £5.1 billion.

Brokers confirm the slowdown is real

On the ground, the figures align with what intermediaries are seeing in their own pipelines. Rhys Edwards (pictured top left), mortgage consultant at Brooks Financial, told Mortgage Introducer his meeting numbers had tracked the national trend. "May and June have been significantly lower than previous years," he said. "It has definitely been a quieter May and June basically."

Louis Mason (pictured top right), director at Oportfolio Mortgages, told Mortgage Introducer enquiry levels remained healthy but that buyer behaviour had shifted. "The figures certainly reflect a market that's become more cautious, but they don't necessarily tell the full story. We're actually still seeing healthy levels of enquiry, although buyers are taking longer to make decisions. People are spending more time assessing affordability, comparing products and making sure they're purchasing the right property rather than rushing into the market."

Media scaremongering is making brokers' jobs harder

Edwards went further, identifying press coverage as an active contributor to buyer hesitancy. When reports emerged claiming the average two-year fixed rate had surpassed 5%, he ran the numbers himself and found the figure did not stack up. "I actually quoted the top rates from the lenders and all the different loan-to-values, did the average, and the average was 4.2 at that point, not 5, as the press were pointing out, so things like that really didn't help."

For Edwards, the episode pointed to a wider issue, that inaccurate headline figures, however quickly corrected, shape buyer psychology in ways that are hard to undo. He added swap rates had become far more sensitive to geopolitical events than in previous years, compounding the challenge. "The wholesale market seems to be significantly more reactive to political and geopolitical events," he said. "I think we're in newer territory than we have been in."

Managing rate expectations this summer

With hopes of a Bank of England base rate cut this summer fading, both brokers said they were actively managing client expectations around timing. Mason said his firm discouraged clients from making major financial decisions based on rate predictions. "We focus on helping clients secure the most suitable mortgage available today. If rates improve in the future, there are often opportunities to review options, but waiting indefinitely can sometimes end up costing more than acting now."

Edwards said his approach was to keep undecided clients engaged rather than pressuring them into action. "It's never the right time. It's the right property and the affordability works for you." He flagged some clients had explicitly told him they intended to wait, adding his role was to ensure they were informed and ready when they chose to move.

Remortgage approvals and the product transfer effect

The sharp fall in remortgage approvals drew comment from both brokers, but Edwards cautioned the headline figures did not capture the full picture. Product transfers – arrangements where a borrower moves to a new deal with their existing lender without a full remortgage application – do not appear in the Bank of England approval data, and Edwards said he had steered a number of clients toward that route where retention deals were competitive. "I've certainly recommended that for quite a lot of my own clients," he said.

Mason advised clients approaching the end of a fixed term not to wait for better rates before securing a deal. "Most lenders allow borrowers to switch onto a cheaper product if rates improve before completion, so locking something in provides peace of mind while still retaining flexibility. It's about reducing risk rather than trying to perfectly time the market."

The case for acting now

For buyers still sitting on the fence, Mason made the case for moving forward when the fundamentals were right. "If you've found the right property, your finances are in good shape and the repayments are affordable, there's still a strong case for moving forward. Property prices, competition from other buyers and your own personal circumstances can all change while you're waiting. For many people, securing the right home at the right time is ultimately far more important than trying to save a small amount on the mortgage rate."

Edwards, meanwhile, said the market simply needed rates to ease further to restore broader momentum. Reflecting on advice from his first manager, he offered a parting observation: "Interest rates go up like a rock and can come down like a feather. We could do with that feather speeding up a little bit to drive a little bit more interest in the market for us all."

Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.