Home loan approvals shrank for a second straight month in August, landing at 54,918 versus a downwardly revised 55,928 in July, according to the Bank of England. Economists were expecting no change, so the dip surprised forecasters. That tally is the lowest since December 2023.
The squeeze is coming from higher borrowing costs that have climbed as the war in Iran drags on. Key UK mortgage rates are now brushing up against 6%, a level that is sidelining many would-be buyers.
Another cloud over housing: mounting talk that John Healey, the Chancellor of the Exchequer, may lift property taxes in his first budget to shore up the public finances. "Many prospective buyers have understandably been taking a more cautious approach and waiting to see what measures are announced in the Autumn Budget," said Nathan Emerson, CEO at Propertymark.
Property surveyors expect house prices to decline over the next three months. London looks particularly vulnerable given its exposure to potential levies on high-value homes. Official data show the capital's average price is down by about £20,000 from the peak reached in mid-2025.
Through uncertainty, steady planning helps protect what you have and grow your savings. Join Briefs Finance CEO Jaspreet Singh on September 29th for a FREE live investor workshop, How to Profit From A Dollar That's Losing its Value, where he shows how we're spotting investment opportunities as the dollar falls. Save your spot.
Even as homebuyer interest fades, consumers have held up better since the Iran war began, running down savings and leaning on borrowing to manage higher energy costs. In August, households' net borrowing reached £2.5 billion - the highest monthly total on record - easily topping the £1.9 billion average over the past six months. Net credit-card borrowing increased to £1.2 billion from £900 million, and other unsecured credit, such as car finance and personal loans, rose as well.
"The rise in borrowing comes alongside a two-year high in consumer confidence, driven by a better outlook for personal finances and economic conditions," said KPMG UK's Katie Clinton. She added that the data also reflect more people taking credit "to get by." "With inflation expected to rise in the coming months and as households head towards the traditionally busy pre-Christmas spending period, pressure on budgets could intensify," Clinton said.
Healey faces a tightrope: calm investors worried about the UK's debt while helping households with cost-of-living pressures. To sustain some of the summer's momentum, the government says it plans to introduce a fresh loan program aimed at helping first-time buyers purchase new-build properties. The Bank of England, meanwhile, is expected to offer only limited support. Policymakers have cautioned that if the war in Iran stretches on, the odds of another interest-rate hike rise as elevated energy costs feed through the economy.
For your wallet, the combo of near-6% mortgages, potential property tax changes, and heavier reliance on consumer credit points to a cooler housing market and more cautious big-ticket spending into year-end.
Regularly reviewing your goals keeps your money working toward the future you want. Our CEO Jaspreet Singh is hosting a FREE live investor workshop, How to Profit From A Dollar That's Losing its Value, on September 29th. Sign up free to join him live.
