MORTGAGE approvals for house purchases are down in July as experts warn buyer affordability has “buckled”.
Net borrowing of mortgage debt by individuals decreased to £4.3 billion in July, from £7.7 billion in June, below the previous six-month average of £5.3 billion, new Bank of England data shows.
Net mortgage approvals for house purchases decreased to 56,100 in July, below an average of around 60,800 over the previous six months. Approvals for remortgaging increased to 34,500 in July, from 34,100 in June.
Net borrowing of consumer credit by individuals increased to £2.0 billion in July, from £1.9 billion in June, slightly above the previous six-month average of £1.9 billion.
Within this, net borrowing through credit cards was £0.9 billion in July, down from £1.0 billion in June.
Net borrowing through other forms of consumer credit (such as car dealership finance and personal loans) increased to £1.1 billion in July, from £0.9 billion in June.
Iain Thompson, Director at Evolve Finance, said it is a worrying drop.
He added: “The collapse in net mortgage borrowing down to £4.3 billion reveals the exact point where buyer affordability buckled. While July always carries a standard seasonal dip as the school summer holidays stall transaction pipelines, this drop is far sharper than normal seasonality.
“It represents an absolute freeze rather than just a holiday pause. Mainstream purchase approvals falling to 56,100 shows that buyers hit a wall, but the vital story is the consumer credit surge to £2.0bn. Borrowers aren’t moving; they are staying put and relying on credit cards and personal loans to absorb stretching living costs.
“The rise in remortgaging to 34,500 proves that homeowners are prioritising defensive product transfers over taking on fresh, expensive moving debt. This transactional slowdown is the primary driver behind the stretching sales periods we are seeing on the ground. Affordability, not just summer holidays, has hit a wall.”
Freeze
Toby Quanstrom, Director at Quanstrom Financial, said he expects August’s data to show a bounce-back.
He added: “Mortgage completions are incredibly sensitive to interest rates, so after six months of turbulence, July’s dip is no surprise, but the figures are a rear-view mirror. Net borrowing is not new demand: it is money drawn down at completion in July, and a purchase completing in July typically had its offer accepted around March.
“Approvals are more recent, reflecting applications a few weeks earlier. So the drop from £7.7 billion to £4.3 billion tells you about the market three to four months ago, when fixed rates were climbing sharply from below 4% at the start of the year towards the 4.8% we see today, and buyers understandably paused.
“We are seeing more purchase activity in Q3 than we saw in Q2, and July was actually our busiest month of 2026 for new business, though one firm’s experience is not the whole market. Plenty of people are still waiting to see which way rates go next. The demand is there; the certainty is not.”
Matt Coulson, Founder at Rickmansworth-based Heron Financial Ltd, said July is usually quiet.
He added: “There’s a summer lull baked into July, so I’d be careful reading too much into one month. That said, 56,100 approvals against a six-month average near 61,000 fits the picture we’ve had all year: a market that’s stuck rather than falling. Underneath it, the block is affordability.
“Buyers can generally get the loan they need, but the monthly payment at current rates is more than plenty will stretch to, so they hold off. Purchase approvals fell while remortgage approvals nudged up, which says people are staying put and refinancing rather than moving, exactly how a market behaves when moving feels expensive.
“The big swing in net borrowing, from £7.7 billion to £4.3 billion, looks worse than it is, as that figure is lumpy month to month. Our own July was a strong one, with more of the activity coming from remortgages, which fits that national picture. Until the monthly cost of a mortgage eases, I’d expect purchases to stay subdued, even while remortgaging keeps plenty of us busy.”
Buckled
Stephen Perkins, Managing Director at Norwich-based Yellow Brick Mortgages, said his business is bucking the trend.
He added: “We certainly didn’t see less demand in July. Our own data shows new enquiries were around 38% higher than the previous July, so our experience was very different to the fall in mortgage approvals shown by the Bank of England.
“Mortgage approvals are further along the homebuying journey than initial enquiries, so the two measures don’t necessarily move together at the same time. What we’re seeing at the front end suggests people still want to buy and move, even if economic uncertainty and affordability are slowing how quickly that demand turns into approved mortgages.”
Tony Sanchez, Founder at Bridging Loan Directory, said the fall in net mortgage borrowing is dramatic.
He added: “The figures point to a quieter purchase market, rather than one that has stopped functioning. Purchase approvals fell from 58,200 to 56,100 and remain below their recent average, while the effective rate on newly drawn mortgages increased from 4.35% to 4.45%.
“That combination suggests affordability and uncertainty are still limiting what buyers can commit to. The fall in net mortgage borrowing is more dramatic, but it reflects the balance between new lending and repayments, so should not be read as an equivalent fall in buyer demand.
“Weaker mainstream activity can create demand for chain-breaking and development-exit finance. But the data does not prove that has happened: slower sales can create a need for bridging finance while also making the proposed exit harder to underwrite.”
