The latest Money and Credit report from the Bank of England reveals a 14.9% drop in net mortgage approvals for house purchases, down to 56,205 in May from 66,034 in April.
This was below the average of 63,300 over the previous six months, and the lowest since December 2023, when approvals fell to 52,600. Approvals are down by 10.8% when compared to the 62,980 seen in May 2025.
Approvals for remortgaging with a different lender also decreased, to 33,300 in May from 51,200 in April.
Reactions from property industry commentators were mixed, with some remaining stoic but others calling for urgent intervention.
“We are now seeing the ramifications of the interest rate environment becoming unstable again and the impact this is having on transactions,” Gareth Lewis, deputy CEO of specialist lender MT Finance, said.
“There urgently needs to be some stimulus for the housing market, with the government needing to do something to encourage transactions and activity, which will also benefit the wider economy.
“Talk of the removal of stamp duty has been mooted but it remains to be seen whether that would make a real difference. Volatile funding rates are the real issue at the moment; while everything pointed towards a lower interest rate environment this year, the impact of war in the Middle East has since changed this outlook.”
According to north London estate agent Jeremy Leaf, the impact is now being felt by estate agents, with a drop in interest from potential buyers.
“On the ground, we are finding it is not just the numbers which are down, but the time genuine buyers are taking before playing their mortgage offer card”, he said.
“Concerns remain about the direction of travel for mortgage rates and the cost of living which is delaying decision making as the war in Iran drags on. Looking forward, we expect more of the same at best particularly now that political uncertainty is adding to this caution.”
Anthony Codling, managing director, equity research, RBC Capital Markets, said the decline will negatively impact future builds.
“This marks the weakest reading in five months and sits 8.0% below the five-year average run-rate of 61,094”, he noted. “The sharp monthly decline is likely to negatively impact the UK house builders who had been enjoying a steady improvement through the first quarter of the year.
“April’s print of 66,034 was the strongest since late 2024, making May’s fall all the more jarring. Year-to-date the picture remains broadly supportive: the January-to-May average of 61,972 is holding up, but momentum has stalled.”
But others have shrugged off the dip and see no cause for concern.
“A dip in mortgage approvals shouldn’t be mistaken for a loss of buyer confidence”, Benham and Reeves director Marc von Grundherr cautioned. “Fluctuations are inevitable, particularly against a backdrop of ongoing political and economic uncertainty.
“The reality is that today’s buyers are far more pragmatic and decisive than they were a year or two ago. Rather than waiting indefinitely for the perfect mortgage rate, many have accepted that the market has stabilised and are moving ahead with confidence. The need to move now outweighs the hope of marginally lower rates.
“As long as lenders remain competitive and borrowing costs continue to ease gradually, we expect any slowdown in approvals to prove temporary, with buyer demand remaining resilient through the second half of the year.”
Verona Frankish, CEO of Yopa, agrees. She said: “A decline in mortgage approvals is unlikely to dampen the wider recovery we’re seeing across the housing market. Monthly variation is expected and the housing market rarely moves in a straight line.
“The bigger picture remains encouraging. We’ve seen demand strengthen steadily this year, supported by more competitive mortgage rates and a growing sense of stability. Buyers have become far more willing to press ahead with their plans, recognising that waiting for cheaper borrowing costs may no longer be worthwhile.
“While approval numbers may ebb and flow, the underlying market remains resilient. With lenders continuing to compete for business and expectations of further monetary easing still in place, we’re confident buyer activity will remain healthy throughout the second half of the year.”
