Mortgage lending softened in the latest Bank of England Money and Credit data for May 2026, as borrowing activity continues to reflect a more cautious housing market backdrop. Higher borrowing costs and ongoing affordability pressures are still weighing on demand, with both homebuyers and remortgagers showing restraint despite signs of relative stability in lending conditions.
Property experts react to the latest figures
“A decline in net mortgage borrowing and a decrease in mortgage approvals reflects the continued caution many households are exercising when making significant financial commitments. Affordability remains a key consideration for many buyers, and any uncertainty around household finances or borrowing costs can influence purchasing decisions.
Despite this, there remains an underlying demand from people looking to move home. Propertymark members continue to see committed buyers in the market, and greater certainty around lending conditions, alongside increased housing supply, will be essential to restoring confidence and supporting a healthy level of housing market activity in the months ahead.”
Nathan Emerson, CEO at Propertymark
“The mortgage market showed signs of stabilising in May after the volatility of the previous two months.
Borrowing eased back slightly from April’s levels as rates remained relatively steady and lenders maintained a cautious stance on affordability, while approvals edged lower, suggesting demand has softened but is still there.
While activity is still below long-term averages, the market continues to demonstrate a degree of underlying resilience.
With inflation continuing to come under control and the Bank of England holding rates, confidence should start to improve. That should help support a return of some pent-up demand over time, although any recovery is likely to be measured rather than immediate.”
Richard Pike, sales and marketing director at Phoebus Software
“House hunters remain cautious amid the UK’s volatile economy and with interest rates remaining at 3.75%, the market won’t be seeing a spike in buyer activity any time soon. Particularly those who aren’t in a rush to move, will rather wait until the market has stabilised or rates have come down.”
Nigel Bishop of buying agency Recoco Property Search
“A dip in mortgage approvals shouldn’t be mistaken for a loss of buyer confidence. Fluctuations are inevitable, particularly against a backdrop of ongoing political and economic uncertainty.
The reality is that today’s buyers are far more pragmatic and decisive than they were a year or two ago. Rather than waiting indefinitely for the perfect mortgage rate, many have accepted that the market has stabilised and are moving ahead with confidence. The need to move now outweighs the hope of marginally lower rates.
As long as lenders remain competitive and borrowing costs continue to ease gradually, we expect any slowdown in approvals to prove temporary, with buyer demand remaining resilient through the second half of the year.”
Marc von Grundherr, Director of Benham and Reeves
“A decline in mortgage approvals is unlikely to dampen the wider recovery we’re seeing across the housing market. Monthly variation is expected and the housing market rarely moves in a straight line.
The bigger picture remains encouraging. We’ve seen demand strengthen steadily this year, supported by more competitive mortgage rates and a growing sense of stability. Buyers have become far more willing to press ahead with their plans, recognising that waiting for cheaper borrowing costs may no longer be worthwhile.
While approval numbers may ebb and flow, the underlying market remains resilient. With lenders continuing to compete for business and expectations of further monetary easing still in place, we’re confident buyer activity will remain healthy throughout the second half of the year.”
Verona Frankish, CEO of Yopa
“This latest set of Bank of England data points to a clear slowdown in housing activity through May, with both borrowing and approvals falling back sharply. Net mortgage borrowing dropped to £2.9 billion from £4.4 billion, well below the recent trend, while approvals for house purchases declined to 56,200, and remortgaging activity also eased materially. Taken together, this suggests that demand is being pushed out as households hold back on making long-term financial commitments.
It is important to view these figures in context, though. The May data captures a period when there was still significant uncertainty around whether a ceasefire in the Iran conflict would materialise. That backdrop has weighed heavily on confidence, particularly in a market as sensitive to interest rate expectations as housing. For many prospective buyers, heightened geopolitical risk translates into concerns about inflation, energy prices, and ultimately borrowing costs, which is leading to decisions being delayed rather than cancelled outright.
At the same time, savings behaviour remains relatively firm. Households deposited £5.4 billion into bank and building society accounts in May, with strong flows into ISAs and time deposits as savers continue to take advantage of improved rates. This suggests that while people may be holding off on large purchases such as property, they are still building cash reserves and maintaining a degree of financial resilience in the face of uncertainty.
Looking ahead, much will depend on whether the current ceasefire proves durable. Recent flare-ups have already cast doubt on how long it can hold, and that uncertainty will continue to feed through into mortgage pricing in the near term. However, if tensions do ease more sustainably, we would expect a gradual drift down in mortgage rates as markets reassess the inflation outlook. That in turn should help unlock some of the demand that is currently sitting on the sidelines.
For now, affordability remains stretched and timing the market remains difficult. Borrowers should keep their options under review and be prepared to act when conditions improve, particularly as even modest moves in mortgage pricing can have a meaningful impact on overall borrowing costs.”
Ian Futcher, financial planner at Quilter
“Mortgage approvals dropped to their lowest level since December 2023 in May, illustrating the concerns and difficulties facing buyers and sellers.
The effective interest rate paid on new mortgages jumped to 4.22 per cent while the rate on the outstanding stock of mortgages was unchanged at 3.92 per cent. However, while averages have crept up on the former, the picture on the ground is more encouraging as funding costs move around and lenders compete for business. As some lenders ease rates, borrowers who see a product they like the look of would be wise to secure it, as volatility means nothing should be taken for granted.
Remortgaging numbers also fell, suggesting that borrowers may be opting for the ease of sticking with their existing lender when coming to the end of their current deal, rather than shopping around for a new one with a different lender.”
Mark Harris, chief executive of mortgage broker SPF Private Clients
“These numbers are a sign of what is happening at this moment in time. At the beginning of the year, approval numbers started to pick up quite nicely, which is why April was a much more impressive month compared with May as that came through in the wash. We are now seeing the ramifications of the interest rate environment becoming unstable again and the impact this is having on transactions.
There urgently needs to be some stimulus for the housing market, with the government needing to do something to encourage transactions and activity, which will also benefit the wider economy. Talk of the removal of stamp duty has been mooted, but it remains to be seen whether that would make a real difference. Volatile funding rates are the real issue at the moment; while everything pointed towards a lower interest rate environment this year, the impact of war in the Middle East has since changed this outlook.”
Gareth Lewis, deputy CEO of specialist lender MT Finance
“Mortgage approvals are arguably the most important of all the housing market data, as they are forward, rather than backwards-facing, so they are a reliable indicator of future activity.
On the ground, we are finding it is not just the numbers which are down, but the time genuine buyers are taking before playing their mortgage offer card.
Concerns remain about the direction of travel for mortgage rates and the cost of living, which is delaying decision-making as the war in Iran drags on. Looking forward, we expect more of the same at best, particularly now that political uncertainty is adding to this caution.”
Jeremy Leaf, north London estate agent and a former RICS residential chairma
“A fall in mortgage approvals this month should be viewed in the context of a market that continues to navigate a complex economic backdrop, rather than as a signal that housing demand has weakened materially.
Many prospective borrowers appear to be taking more time to assess affordability, consider their options and build confidence before proceeding. That’s not necessarily a sign of demand disappearing; rather, it reflects a market in which buyers are making increasingly deliberate and informed decisions.
What remains encouraging is that the underlying drivers of demand are still present. People continue to move home, first-time buyers continue to look for ways onto the property ladder, and competition among lenders remains strong. As a result, the foundations for future activity remain intact even if month-to-month figures fluctuate.
With the next MPC decision due on 30 July and the outlook for interest rates still evolving, many borrowers may continue to take a wait-and-see approach in the short term. In that environment, the role of brokers becomes increasingly important. As affordability and product options vary across the market, expert advice can help borrowers understand what’s achievable today and move forward with greater confidence when the time is right.”
Emily Hollands, Group Head of Intermediary Sales and Distribution at Precise
“Approvals for house purchases, a useful measure of market activity as they indicate future borrowing, fell in May as ongoing political and economic uncertainty had an impact on buyer and seller decision-making.
With the effective interest rate on newly-drawn mortgages increasing to 4.22 per cent in May, the impact of higher borrowing costs is also making itself felt. The continuing war in the Middle East, which has pushed up inflation and energy prices, has kept the cost of borrowing higher for longer.
However, the Bank of England’s decision to hold the base rate steady for four consecutive meetings will help steady concerns. And lenders continue to ease mortgage rates, which should improve affordability in the months ahead for those committed to moving.”
Jason Tebb, President of OnTheMarket
“This latest set of Bank of England data points to a clear slowdown in housing activity through May, with both borrowing and approvals falling back sharply.
Net mortgage borrowing dropped to £2.9 billion from £4.4 billion, well below the recent trend, while approvals for house purchases declined to 56,200 and remortgaging activity also eased materially. Taken together, this suggests that demand is being pushed out as households hold back on making long-term financial commitments.
It is important to view these figures in context, though. The May data captures a period when there was still significant uncertainty around whether a ceasefire in the Iran conflict would materialise. That backdrop has weighed heavily on confidence, particularly in a market as sensitive to interest rate expectations as housing.
For many prospective buyers, heightened geopolitical risk translates into concerns about inflation, energy prices and ultimately borrowing costs, which is leading to decisions being delayed rather than cancelled outright.
At the same time, savings behaviour remains relatively firm. Households deposited £5.4 billion into bank and building society accounts in May, with strong flows into ISAs and time deposits as savers continue to take advantage of improved rates.
This suggests that while people may be holding off on large purchases such as property, they are still building cash reserves and maintaining a degree of financial resilience in the face of uncertainty.
Looking ahead, much will depend on whether the current ceasefire proves durable. Recent flare ups have already cast doubt on how long it can hold, and that uncertainty will continue to feed through into mortgage pricing in the near term.
However, if tensions do ease more sustainably, we would expect a gradual drift down in mortgage rates as markets reassess the inflation outlook. That in turn should help unlock some of the demand that is currently sitting on the sidelines.
For now, affordability remains stretched and timing the market remains difficult. Borrowers should keep their options under review and be prepared to act when conditions improve, particularly as even modest moves in mortgage pricing can have a meaningful impact on overall borrowing costs.”
Ian Futcher, financial planner at Quilter
