UK mortgage approvals fell to 60,000 in January 2026, the lowest level in two years, marking a fourth consecutive monthly decline in mortgage approvals in the UK and undershooting economists’ expectations.
The FT links the drop in UK mortgage approvals to a confidence problem more than a rate problem: even as mortgage pricing has improved, households have remained hesitant after the long run of Budget speculation and the policy noise that preceded Reeves’ November 2025 package, including the proposed “mansion tax” and other property-adjacent signals that made buyers pause.
The article’s nuance is that mortgage approvals sit within a market where the plumbing is slowly improving. The effective mortgage interest rate fell to 4.09% in January, the lowest in three years, and the market has some supportive tailwinds: easing inflation, real wage growth, and lenders competing again at the margin.
House prices also nudged up (0.3% month-on-month in February, around 1% year-on-year, with an average price cited near £273,176) suggesting the market is not collapsing but rather moving with the cautious rhythm of a post-shock cycle. What makes the slide in UK mortgage approvals more telling is its timing. It arrives ahead of the Spring Statement, when the government is explicitly trying to restore a sense of predictability.
The FT suggests the housing market has become a behavioural barometer for that claim. Buyers respond not just to rates but to the noise level around taxation, regulation and household costs. If the public thinks rules may change, or simply can’t be bothered with uncertainty, transactions drop first, even when prices remain sticky due to constrained supply.
Geopolitics adds another layer. The Middle East conflict threatens to push up energy costs and delay further BoE easing, which would weigh on affordability at exactly the wrong moment for mortgage approvals. The Bank of England held rates at 3.75% at its last meeting, and the market’s expectation of rapid cuts is now less certain in an energy-driven inflation scare.
In short: UK mortgage approvals are a confidence measure, and confidence is still bruised. The housing market may have a path to recovery, but it runs through calmer policy signals, a cooperative gilt curve, and an energy price backdrop that doesn’t reintroduce the fear premium households only just stopped pricing into their decisions.
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