UK mortgage approvals dropped unexpectedly in November, signaling caution among households post-Budget. Consumer credit growth hit a 29-month low as borrowing costs and stamp duty changes impacted the housing market.
UK mortgage approvals unexpectedly fell in November, interrupting the gradual recovery in housing market activity. Data released by the Bank of England on Friday revealed a decline in net mortgage approvals — approvals net of cancellations — to 65,700 in November, down from 68,100 in October and below the 68,500 forecast by economists polled by Reuters.
The figures indicate growing caution among households following the Autumn Budget, as borrowing costs remain elevated. Consumer credit growth also slowed, with a £0.9 billion rise in November compared to the £1.0 billion increase in October and an average monthly gain of £1.2 billion over the prior six months. The annual growth rate for consumer credit dropped to 6.6 percent, its lowest in 29 months.
Elias Hilmer, economist at Capital Economics, attributed the cautious behavior to ongoing financial uncertainties. “Households’ caution with their borrowing and saving ahead of the Budget hasn’t gone away,” he said, warning that the data adds to the risk of economic contraction in the final quarter of 2024. The UK economy stagnated over the three months to September and contracted in October.
Despite the dip, some experts see the data as a return to normal activity levels after a volatile October. Elliott Jordan-Doak of Pantheon Macroeconomics noted that pre-Budget fluctuations had created temporary distortions in the market.

While mortgage approvals fell sharply over 2022 and remained subdued in 2023 due to rising borrowing costs, approvals have rebounded by 13,000 so far in 2024 as rates eased. However, November saw a slight uptick in mortgage rates, dampening demand. “November was an average month, possibly due to the Autumn Budget taking the steam out of the market and hitting sentiment,” said Charles Yuille, managing director at Willow Brook Mortgages. He added that demand remained strong, fueled in part by the impending end of the stamp duty holiday.
Chancellor Rachel Reeves confirmed in the Budget that the temporary stamp duty holiday, which raised the threshold for first-time buyers from £300,000 to £425,000, will end in March. From April, first-time buyers will face higher stamp duty costs on properties worth more than £300,000.
Tomer Aboody of MT Finance expects further interest rate cuts in 2024 to help stabilize the housing market. “Lower borrowing costs should help boost mortgage approvals and get them back on track,” he said.
In November, the Bank of England reported a drop in the effective interest rate on new mortgages to 4.5 percent, the lowest since April 2023. However, the rate on outstanding mortgages rose to 3.8 percent, the highest since the series began in 2016, reflecting the impact of rising borrowing costs since 2021.
On a more positive note, house prices continued to climb. Data from Nationwide showed a 4.7 percent annual increase in December, marking the fastest pace of growth since October 2022.
As the housing market grapples with shifting conditions, experts suggest that cautious optimism may be warranted. The combination of interest rate adjustments and policy changes in early 2024 will likely shape the trajectory of mortgage approvals and overall market activity in the months ahead.
Read Also:Mike Johnson reelected US House Speaker after tense vote