Slowdown in activity seen as temporary amid rate cut hopes
Mortgage approvals on house purchases fell to 61,013 in December, a 4.8% decline on November and 8.4% lower than the 66,634 recorded in the same month a year earlier, according to the latest figures from the Bank of England.
The drop in purchase approvals was broadly in line with the usual year‑end easing in activity, but industry commentators suggested that conditions could improve in the coming months if anticipated cuts to the bank rate materialise.
Approvals for remortgaging with a new lender rose by 1,600 to 38,400 in December, pointing to a potentially stronger remortgage pipeline into 2026 as borrowers continue to refinance away from older, cheaper products.
The effective interest rate on newly drawn mortgages slipped to 4.15% in December, down from 4.20% in November, offering a modest easing in costs for new borrowers.
“A modest dip in mortgage approvals during December should be viewed in the context of the time of year and while Autumn Budget uncertainty had been removed by this point, the festive period naturally slows decision-making and transaction progression,” said Jonathan Samuels (pictured top left), chief executive of specialist lender Octane Capital.
“What’s far more important is the underlying improvement in market conditions compared to the same point last year. Inflation has remained under control, borrowing costs are lower, and affordability has strengthened, all of which has helped to support buyer confidence.
“As we’ve entered the new year, these foundations suggest that any softness seen in December is likely to be short lived, with activity expected to pick up as momentum builds through the early part of the year.”
Mark Harris (pictured top centre), chief executive of broker SPF Private Clients, pointed out that “the underlying resilience of the housing market has been in evidence now that the Budget is out of the way.”
“As we move towards spring, the good news for borrowers is that lenders are keen to lend and have the funds available to do so,” Samuels added. “Many of the big lenders have reduced their mortgage rates and while some have increased pricing in recent days, we expect rates to jump around, rather than significantly move one way or another.
“Remortgaging numbers rose, suggesting that borrowers coming off low rates are shopping around for the best rate possible rather than opting for the ease of sticking with their existing lender.”
Nathan Emerson (pictured top right), chief executive of industry body Propertymark, however, noted that macroeconomic improvements had yet to translate fully into housing market momentum.
“We currently sit in a position where people who are thinking of a house purchase are rightly cautious regarding their finances,” he said. “It is, however, positive to see a modest uplift regarding remortgaging as 2025 ended.
“For the housing market to deliver sustainable growth, there are many cogs that need to turn in harmony with each other, and although we are certainly seeing encouraging signs regarding the number of properties coming to the market, as well as initial buyer interest on properties – there is a need for overall financial confidence from consumers to for the 'housing equation' to fully work.”
For mortgage professionals, the latest data underline a softer end to the year for purchase business set against a more active remortgage segment, with attention now focused on the timing and scale of any monetary policy shifts and their impact on borrower affordability through 2026.
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