The ‘effective’ interest rate, the actual interest paid on newly drawn mortgages, declined for the fifth straight month, to 4.28% in July from 4.34% in June, according to figures from the BoE

Mortgage approvals for house purchases in the UK rose to 65,400 in July, up by 800 from June, as the property market sees the Bank of England (BoE) on a rate-cutting path.

The ‘effective’ interest rate, the actual interest paid on newly drawn mortgages, declined for the fifth straight month, to 4.28% in July from 4.34% in June, according to figures from the BoE.

Yet, in a potentially troubling sign, Britons borrowed less for mortgages in July. Net borrowing of mortgage debt dropped by £900m in July to £4.5bn. This was a turnaround from a £3.2bn rise in borrowing in June to £5.4bn.

Nathan Emerson, CEO of Propertymark, said: Considering the many twists and turns within the wider economy currently, it’s extremely positive to see a further uplift in mortgage approvals. The resilience of the housing market is often a direct indicator of consumer confidence and affordability, and it has been reassuring to see forward momentum as the year has progressed.

Hopefully, now that the Bank of England has taken the call to cut the base rate by a further quarter per cent, we should see lenders bringing additional levels of competition to the marketplace. Those already on fixed-term mortgage products should already be feeling the combined benefit of three base rate cuts across the year, Emerson said.

The annual growth rate for net mortgage lending rose marginally from 2.8% to 2.9% in July. Gross lending increased to £24.3bn in July, from £24bn in June, while gross repayments also rose in July, to £19.7bn, from £19.2bn in June.

Richard Donnell, executive director at Zoopla, said: Mortgage lending for home purchase is up 3% on last year, mirroring the steady increase in new sales being agreed which have recovered over 2025 and lead mortgage approvals data.

We expect a continued increase in demand for mortgages as sales continue to increase but the drift higher in average mortgage rates and concerns over property taxes at the upper end of the market may reduce activity in the next 1-2 months, he said.

The BoE reduced interest rates to 4% in August, the fifth cut in a year. This move brought borrowing costs back to levels not seen since March 2023, the lowest in two years.