Mortgage approvals and lending dipped in November as borrowers showed caution ahead of the Budget and mortgage rates increased for the first time since February, the latest figures from the Bank of England show.
The Money and Credit statistics reveal that in November, gross lending decreased by £0.6 billion to £23.7 billion, while gross repayments decreased by £3.1 billion to £19.4 billion.
This comes as the average interest rate paid on newly drawn mortgages increased for the first time since February, to 4.20% in November from 4.17% in October. The rate on the outstanding stock of mortgages was 3.90% in November, also up from 3.89% in the previous months.
Net mortgage approvals fell by 500 to 64,500 in November. By contrast, approvals for remortgaging with a different lender rose by 3,200 to 36,600.
More positively, net borrowing of mortgage debt increased to £4.5 billion in November, following a decrease of £1.0 billion to £4.2 billion in October. The annual growth rate for net mortgage lending also increased to 3.3% in November, from 3.2% in the previous month, the highest since January 2023 (3.4%).
Jason Tebb, president of OnTheMarket, commented: “Intense speculation ahead of the Budget and the repercussions it might have for the housing market had an impact on approvals for house purchases – an indicator of future borrowing. Even so, approvals decreased only slightly in November, underlining the overall resilience and determination from buyers and sellers alike to proceed with their moves.
"With the rate on newly-drawn mortgages increasing for the first time since February 2025, affordability challenges continue. However, the Bank of England base rate cut in December, with more expected to come this year, should provide borrowers with further relief. With lenders already cutting their mortgage rates this month as they try to get off to a strong start, there is further good news for borrowers.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “With mortgage approvals dipping slightly in November, the underlying resilience of the housing market is in evidence despite many challenges facing it.
“The effective interest rate paid on new mortgages rose to 4.20% after many months of falls, while the rate on the outstanding stock of mortgages also increased to 3.9 per cent, highlighting that affordability remains a concern for many.
“As we head into a new year, the good news for borrowers is that lenders are keen to lend and have the funds available to do so. Many of the big lenders have reduced their mortgage rates recently as they attempt to get off to a strong start this year, and we expect others to follow suit. Those who can’t compete on rate may look to improve criteria instead, which is also good news for borrowers.
“Remortgaging numbers rose, suggesting that borrowers coming off low rates are shopping around for the best rate possible rather than opting for the ease of sticking with their existing lender.”
Jeremy Leaf, north London estate agent and former RICS residential chairman, added: “These figures are particularly interesting as they set the tone for housing market activity over the next few months at least and cover a period when worries about Budget tax changes were at their height.
“Although mortgage approvals dipped a little, buyers and sellers continued to demonstrate considerable resilience in view of the level of uncertainty, which bodes well for the market.
“Early signs this year have been encouraging although it is too early to say with any certainty whether the relief at lack of punitive tax measures will have a significant impact on decision-making."
