Increase in approvals points to growing market confidence, industry leaders say
Mortgage approvals for house purchase climbed by 1,000 to reach 65,900 in September, according to the latest figures from the Bank of England.
The uptick in approvals, a key indicator of future borrowing, points to a strengthening in market sentiment even as broader economic conditions remain uncertain.
Net borrowing of mortgage debt by individuals rose by £1.2 billion to £5.5 billion in September, the highest since March. The annual growth rate for net mortgage lending increased to 3.2%, up from 3% in August. Gross lending reached £24.9 billion, while gross repayments edged up to £20.3 billion.
The effective interest rate on newly drawn mortgages fell by seven basis points to 4.19% in September, the lowest since January 2023; while the rate on outstanding mortgage balances remained unchanged at 3.89%.
“A renewed strengthening in mortgage approvals reinforces the positive market sentiment and consistency that we’ve seen across the mortgage sector throughout 2025,” said Richard Merrett (pictured top left), managing director at mortgage adviser Alexander Hall, commenting on the Bank of England’s Money and Credit report for September.
“Despite broader economic uncertainty, borrowers continue to show confidence, supported by more accessible mortgage products and steady lender appetite. There is, of course, a chance that we could see mortgage market activity reduce in the short term as the Autumn Budget approaches, with some homebuyers taking a brief pause to see what the government has up its sleeve.
“However, any hesitation will be temporary and, with inflation now holding steady at 3.8% for the third month running, there’s growing optimism that a base rate cut could still arrive before Christmas. If so, it would help fuel renewed momentum and set the stage for a strong start to 2026.”
For Nathan Emerson (pictured top centre), chief executive of industry body Propertymark, “many cogs need to turn harmoniously together when it comes to consumer confidence and affordability.”
“There are still concerns which need to be acknowledged, such as inflation sitting close to double what the Bank of England have targeted and the influence this can have regarding base rate decisions,” he said. “Despite this, we remain in a much stronger position than we started the year at, when the base rate stood much higher at 4.75%.”
According to Mark Harris (pictured top right), chief executive of mortgage broker SPF Private Clients, the underlying resilience of the housing market is evident in the latest mortgage approval numbers. He, however, stressed that with the rate on the outstanding stock of mortgages unchanged at 3.89%, affordability remains a concern for many.
“The good news for borrowers is that lenders are keen to lend and have the funds available to do so,” Harris said. “Falling swap rates, which underpin the pricing of fixed-rate mortgages, are encouraging some of the big names to reduce mortgage rates as they look to pick up more business before the year end.
“Remortgaging numbers fell, suggesting that borrowers may be sticking with their existing lender and refinancing rather than going through the hassle of another mortgage application with a new lender.”
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