Mortgage approvals for house purchases fell to 59,999 in January 2026, the lowest level in two years, according to the Bank of England’s Money and Credit report. The figure represents a decline from 55,946 recorded in January 2024, signalling increased caution among property buyers.
Approvals for remortgaging with a different lender also decreased marginally, falling to approximately 38,100 from 38,400 in December 2025.
House price growth remains modest
Nationwide Building Society reported that the average UK property price reached £273,176 in February, representing a 0.3% month-on-month increase and 1.0% annual growth.
Lucian Cook, head of residential research at Savills, noted: “With nominal house price growth running at just 1%, prices are still falling on an inflation adjusted basis. This is contributing to a gradual improvement in affordability, particularly across London and the south. However, against the current economic backdrop, many prospective buyers remain cautious about taking advantage of that improved position.”
Cook added that activity in the market segment above £1 million remains down 3.2% year-on-year, indicating “a slow bottom-up market recovery”.
Economic uncertainty weighs on activity
Simon Gammon, managing partner at Knight Frank Finance, attributed the decline in mortgage approvals to lingering economic uncertainty following the November Budget. He commented: “The outlook for activity and rates appeared relatively benign only last week, but conflict in the Middle East has introduced fresh uncertainty. Any spike in oil prices could fuel global inflation or, at the very least, prompt central banks, including the Bank of England, to delay further rate cuts until the outlook becomes clearer.”
Jeremy Leaf, a north London estate agent, said: “Clearly buyers are still nervous despite expectations that inflation and mortgage rates will continue along a downwards path. On the ground the amount of choice, particularly of flats, is encouraging more first-time buyers to transact.”
Market plateaus after sustained recovery
Richard Donnell, executive director at Zoopla, stated: “The latest mortgage approvals data align closely to the overall trends in the housing market with a sustained recovery in sales since 2023 now starting to plateau. Zoopla data shows 8% fewer buyers in the market than last year yet demand for mortgages is just 1% lower than a year ago.”
Donnell noted that housing sales being agreed are just 2% down on last year, with strong demand from first-time buyers supported by the lowest mortgage rates in four years and less stringent assessments of mortgage affordability.
Nathan Emerson, CEO of Propertymark, reported that member agents have seen a near 25% increase in viewings per available property compared to twelve months ago. However, he observed: “We are yet to see this heightened activity fully translate into completed transactions, reflecting an evident degree of caution among consumers.”
The data suggests the UK housing market is entering a period of moderation, with improved affordability conditions yet to translate into significantly higher transaction volumes as buyers assess their financial positions carefully before committing to purchases.
