UK Housing Market Faces Mixed Signals Amid Low Mortgage Approvals

In January 2026, mortgage approvals for home buyers in the UK fell to a two-year low, with just 59,999 approvals recorded, according to the Bank of England's Money and Credit report. This figure marks the lowest since January 2024, when approvals totaled 55,946. Additionally, approvals for remortgaging with different lenders slightly decreased from 38,400 in December to approximately 38,100 in January. This decline in mortgage activity occurs despite a reported increase in house prices, which rose by 0.3% month-on-month in February, bringing the average UK house price to £273,176.

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Nationwide Building Society noted that the annual growth rate for house prices remained steady at 1.0% in February, indicating a modest recovery following a dip at the end of 2025. Robert Gardner, Nationwide’s chief economist, suggested that improved affordability and easing credit availability have supported first-time buyer activity. However, Lucian Cook from Savills cautioned that nominal house price growth is still falling when adjusted for inflation, contributing to a cautious sentiment among prospective buyers.

The Independent

Experts express mixed sentiments regarding the future of the housing market. Rob Wood, chief UK economist at Pantheon Macroeconomics, acknowledged the disappointing mortgage approval figures but remained optimistic about a potential increase in housing transactions, attributing the current sentiment to a lag in response to budget expectations. Conversely, Jason Tebb, president of OnTheMarket, highlighted that last year's rate reductions positively impacted market activity, and further cuts could stimulate transactions.

The Guardian

However, geopolitical tensions, particularly in the Middle East, have introduced uncertainty. Simon Gammon from Knight Frank Finance warned that any spike in oil prices could hinder the Bank of England's ability to cut rates, which are crucial for improving market conditions. Alice Haine from Bestinvest noted that many borrowers with fixed-rate mortgages expiring this year face refinancing at significantly higher rates, which could pressure disposable incomes.

The Guardian

Despite some optimism, there are concerns regarding the sustainability of the housing market's recovery. Ian Futcher, a financial planner at Quilter, indicated that a marked uplift in house prices is unlikely in the near term, as many potential buyers may hold off on transactions in hopes of securing better mortgage deals later. Nathan Emerson, chief executive of Propertymark, reported that while well-priced homes are attracting interest, the overall market remains subdued.

The Independent

• “Go to website Rob Wood, chief UK economist at Pantheon Macroeconomics said: “Granted net new mortgage approvals for house purchase disappointed the consensus by falling to a two-year low.” — Rob Wood, Chief UK Economist, Pantheon Macroeconomics

The Independent

• “Housing market activity is likely to recover in the coming quarters, especially if the improving affordability trend seen last year is maintained as expected.” — Robert Gardner, Chief Economist, Nationwide

The Independent

• “ Jeremy Leaf, a north London estate agent said: “Clearly buyers are still nervous despite expectations that inflation and mortgage rates will continue along a downwards path.” — Jeremy Leaf, North London Estate Agent

The Independent

• “They face refinancing at much higher rates than their current deal, which will put pressure on disposable incomes, though they can take comfort that they have avoided the worst of the mortgage crisis.” — Alice Haine, Personal Finance Analyst, Bestinvest

The Independent

The UK housing market is navigating a complex landscape of declining mortgage approvals, steady house price growth, and external economic pressures, leaving many stakeholders cautiously optimistic about the future.

The Guardian