What happened in the housing market
UK lenders approved 53,443 home loans in September, down from 54,814 in August and short of the 54,000 forecasters expected. That is the lowest tally since December 2023 and the third month in a row of declines, per Bank of England data released Thursday.
The backdrop is pricier mortgages linked to the war in Iran, which is keeping many would-be buyers on the sidelines. Typical lending rates are sitting near 6%, up from about 4.8% before the conflict began, and the Bank of England is signaling it is leaning toward a rate increase at next week's meeting.
Consumer borrowing and saving
Unsecured borrowing came to £1.9 billion in September, easing from a record £2.7 billion in August but still running ahead of the pace seen before the Iran war. Households added £4.7 billion to bank deposits, which was below the average monthly increase over the prior six months.
The household picture and your portfolio
Ruth Gregory, Capital Economics' deputy chief UK economist, said the pattern points to families softening the squeeze on inflation-adjusted incomes from elevated energy costs by tapping more credit and building smaller cash buffers. "But they won't be able to cushion the blow indefinitely," she said. "And the near-term measures to ease household energy costs announced in the Budget won't be enough to prevent real consumer spending growth from weakening. We suspect households will rein in spending in Q4 and going into the first half of next year."
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Why it matters: softer mortgage demand and rising reliance on unsecured credit can weigh on housing activity and consumer-facing names in your portfolio, especially if the BOE follows through with tighter policy and energy bills keep pressure on real incomes.
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