UK mortgage approvals plunge and consumer credit fluctuates, altering market expectations for interest rate cuts

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智通财经2026/09/01 09:16

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According to data from the Bank of England, mortgage approvals in July fell to 56,000, the lowest level since January 2024 and well below the previous market expectation of around 60,000. Meanwhile, June’s figure was revised slightly upward to 58,000.
In contrast to the weakness in the housing market, net unsecured consumer credit rose sharply by about £2 billion in July, exceeding the expected £1.8 billion and marking the largest monthly increase since November 2025. This shows that residents are supporting consumption through borrowing as mortgage demand cools.
Institutional analysis points out that recent monetary and credit data suggest a relatively weak near-term outlook for the housing market. Households may maintain spending by lowering their savings rate and increasing borrowing, while the overall monetary environment does not yet support persistently high inflation.
At the same time, surveys from mortgage institutions show that the year-on-year increase in house prices in August was about 1.6%, which is significantly lower than the rise in consumer prices over the same period, indicating clear lack of momentum in the housing market.
The market generally expects the Bank of England to keep interest rates unchanged this month, but interest rate futures have fully priced in one 25-basis-point rate hike by the end of the year. Adding to this is the global trade uncertainty triggered by Trump’s tariff remarks, putting multiple constraints on the short-term outlook for the pound sterling.
Going forward, attention will focus on the stickiness of UK service sector inflation and wage data. If consumer credit continues to expand while the housing market further cools, the Bank of England’s policy trade-offs will become even more complex.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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UK mortgage approvals plunge and consumer credit fluctuates, altering market expectations for interest rate cuts

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