Mortgage approvals for house purchases in the United Kingdom fell to their lowest level in 18 months in December, according to new data from the Bank of England, signaling continued weakness in the housing market as the year drew to a close. Lenders approved just over 61,000 mortgages during the month, a figure that came in well below market expectations and marked the weakest reading since June 2024. The data surprised economists, who had anticipated a modest rebound, and reinforced concerns that high borrowing costs and policy uncertainty delayed a sustained recovery in housing activity heading into 2026. November’s approval numbers were also revised lower, underscoring the softness in demand late last year.
The slowdown reflects lingering effects from the end of a temporary tax incentive on property purchases earlier in 2025, combined with renewed caution ahead of the government’s annual budget in November. Market participants said uncertainty over potential changes to property taxation weighed heavily on buyer sentiment, particularly in higher value segments of the market. Although the budget measures were largely viewed as supportive, transaction activity between the announcement and the end of the year remained subdued. Industry professionals noted that approvals typically precede completed sales by at least a month, suggesting that housing transactions are unlikely to rebound sharply at the start of 2026.
House price indicators painted a mixed picture. Data from Halifax showed prices rose modestly over the year to December, while figures from Nationwide pointed to similarly subdued growth. In both cases, annual price increases lagged consumer price inflation, indicating that real house prices continued to face pressure. However, survey evidence suggested tentative signs of improving sentiment toward the end of the year. The Royal Institution of Chartered Surveyors reported that sales expectations improved in December, and some brokers noted an increase in buyer inquiries early in January.
Alongside weak mortgage approvals, consumer credit growth remained elevated. Borrowing by households rose at an annual pace of more than eight percent in December, matching one of the fastest growth rates seen since mid 2024. Although lending growth slowed slightly from the previous month, it highlighted continued reliance on credit to support spending. Stronger retail sales data in December offered some reassurance about broader economic momentum, but the housing sector remains a potential drag. Policymakers and investors will be watching closely to see whether easing financial conditions later this year can translate into a more durable recovery in mortgage activity and housing transactions.
