Mortgage Approvals Slump in May as Higher Rates Hit Buyers

Mortgage Approvals Slump in May as Higher Rates Hit Buyers

Mortgage approvals fell sharply in May as higher borrowing costs and affordability pressure weighed on buyers.

Bank of England Money and Credit data showed that net mortgage approvals for house purchases fell to 56,200 in May, down from 66,000 in April. That left approvals below the previous six-month average of 63,300 and marked a clear cooling in buyer activity after a stronger April.

The figures suggest that higher mortgage rates are now feeding directly into the housing market. Buyers are still active, but many are finding that the numbers are harder to make work, especially where deposits are smaller, debts are higher or monthly budgets are already stretched.

Mortgage approvals fell sharply in May

Mortgage approvals are an important early signal because they show how many buyers are being approved for loans before future purchases complete. When approvals fall sharply, it can suggest weaker housing activity ahead.

The May fall was significant because approvals dropped by nearly 10,000 from April. That is not a small monthly movement. It suggests that buyers and lenders both became more cautious as mortgage-rate pressure increased.

The decline does not mean the market has stopped. More than 56,000 approvals were still recorded. But it does show that fewer buyers were moving through the mortgage process than earlier in the spring.

For more detail, read why a Mortgage in Principle matters when house hunting.

Higher rates are hitting affordability

The simplest explanation is affordability. When mortgage rates rise, the same loan becomes more expensive each month. That can reduce how much a buyer can borrow and make affordability checks harder to pass.

A buyer who could afford a property at one rate may need to lower their search budget if the available rate increases. Others may need a bigger deposit, a longer term, fewer debts or a different lender before the numbers work.

This is why mortgage approvals can fall even when people still want to buy. Demand may exist, but the mortgage has to fit the lender’s affordability model and the borrower’s real monthly budget.

For more detail, read how mortgage affordability is calculated by lenders.

Net mortgage borrowing also slowed

The Bank of England also reported that net borrowing of mortgage debt by individuals fell to £2.9bn in May, down from £4.4bn in April. That was below the previous six-month average and the lowest level since May 2025.

This matters because it shows the slowdown was not only visible in approvals. Actual mortgage borrowing also weakened.

Mortgage borrowing can be affected by the timing of completions, so it does not always move perfectly in line with approvals. But the direction of travel in May was clear: the mortgage market lost momentum.

For buyers and sellers, that points to a more cautious market where pricing, affordability and lender choice matter more.

Buyers are becoming more selective

A fall in approvals does not mean buyers have vanished. It often means they are becoming more selective and more cautious before applying.

In a higher-rate market, buyers may spend longer checking whether a property is affordable. They may make lower offers, walk away from stretched purchases or delay applications until they have clearer numbers.

That can be sensible. A mortgage is not just about getting accepted. It needs to remain manageable once bills, insurance, legal fees, moving costs, maintenance and emergency savings are considered.

For more detail, read what factors affect how much you can borrow for a mortgage?

First-time buyers may feel the pressure most

First-time buyers can be especially exposed when approvals fall. They often have smaller deposits, higher loan-to-value borrowing and less experience of the mortgage process.

If rates rise, the monthly payment can increase quickly. If lenders assess affordability more cautiously, the amount available to borrow may fall. If asking prices do not adjust quickly enough, some first-time buyers may find their search range narrowing.

That does not mean first-time buyers cannot proceed. It means preparation becomes more important. Checking borrowing power early, understanding deposit position and avoiding unrealistic property searches can reduce wasted time.

For more detail, read first-time buyer mortgages explained.

Sellers may need to respond to buyer affordability

Falling approvals can also matter for sellers. If fewer buyers are being approved, there may be fewer proceedable buyers in the market. That can affect viewing levels, offers and the speed of sales.

Sellers may need to think carefully about pricing. A property can look attractive, but if the asking price does not fit what buyers can borrow, interest may be limited.

This does not mean sellers need to panic or cut prices automatically. It means pricing needs to reflect the current mortgage environment, not just older expectations.

A buyer with a clear Mortgage in Principle and realistic budget may become more valuable in a market where approvals are harder to secure.

Remortgagers are also affected by higher rates

The May data focuses on house-purchase approvals, but the same rate pressure affects remortgagers. Homeowners coming to the end of older fixed-rate deals may face higher payments when choosing a new product.

Some borrowers may choose a product transfer with their current lender. Others may remortgage to a new lender, adjust the term or consider a different product type. Some may delay moving because their next mortgage looks more expensive than expected.

That can reduce housing-market activity, because some homeowners may decide to stay put rather than take on a larger mortgage at a higher rate.

For more detail, read what happens at the end of a fixed-rate mortgage?

Lender choice becomes more important

When approvals fall, lender choice matters more. Different lenders assess income, debts, deposit, credit history, property type and affordability in different ways.

One lender may offer less than expected, while another may be more suitable for the same borrower. This can be especially relevant for people with car finance, credit-card balances, self-employed income, commission, bonuses, probation periods or past credit issues.

A lower approval market is not the time to apply randomly. A poorly matched application can lead to delay, disappointment or an avoidable decline.

For more detail, read how getting a mortgage without a broker works.

What buyers should do now

Buyers should treat the May approval slump as a sign to prepare carefully, not as a reason to give up. Mortgages are still being approved, but lenders and buyers are operating in a more cautious environment.

Before making offers, buyers should check affordability, get a Mortgage in Principle, review credit files, prepare documents and understand how debts or regular commitments affect borrowing power.

It is also sensible to test the monthly payment at realistic rates. A property search based on old mortgage assumptions can quickly become misleading if current rates are higher.

For more detail, read how to improve your chances of mortgage approval.

Source

This article is based on the Bank of England’s Money and Credit release for May 2026. The Bank said net mortgage approvals for house purchases fell to 56,200 in May from 66,000 in April, below the previous six-month average of 63,300. It also said net borrowing of mortgage debt by individuals fell to £2.9bn in May from £4.4bn in April.

Bottom line

Mortgage approvals slumped in May as higher rates and affordability pressure hit buyers.

The fall from 66,000 approvals in April to 56,200 in May shows a clear cooling in buyer activity. Mortgage borrowing also slowed, suggesting the wider market lost momentum.

For buyers, the practical message is to work from current numbers, not old assumptions. For sellers, buyer affordability needs to be taken seriously. For remortgagers, higher rates may affect whether moving or switching product feels comfortable.

The market is still open, but it is more cautious. In that kind of market, realistic affordability and suitable lender choice matter more than ever.

👉 Check your mortgage position before making a full application.