Net mortgage approvals in September stood at 43,000, the lowest figure since January 2023, the Bank of England (BoE) has found.

In its monthly money and credit report, the BoE revealed that the number of approvals was below the forecasted 45,000 mortgages expected to be signed off. September was also the third consecutive month where net mortgage approvals dropped.

Furthermore, it is also the second lowest monthly total seen since the start of the year.

Chief executive officer at Octane Capital, Jonathan Samuels, said: “It was certainly a case of too little too late with regard to the Bank of England’s attempts to curb inflation with a slow but steady approach to increasing interest rates. Now it seems as though it’s a case of the same with respect to their decision to freeze them, with mortgage approvals now reducing for the third consecutive month in a row.

“While the increasing cost of borrowing may have finally halted, it remains considerably higher than many modern day buyers are used to and this has been the primary deterrent in the current market, with buyer levels reducing, transaction numbers following suit and house price cooling.”

The BoE also revealed that net borrowing of mortgage debt by individuals decreased from £1.1bn in August to -£0.9bn in September, the lowest amount since April 2023, with net borrowing of consumer credit also falling from £1.7bn to £1.4bn month-on-month.

National director at Just Mortgages, Carl Parker, stated: “Despite the positive trend we have seen with mortgage rates in recent months, today’s data demonstrates the difficult climate we still find ourselves in as borrowers continue to adjust to a higher interest rate environment. Even as rates improve, there’s no question affordability remains the biggest challenge facing borrowers. It’s up to brokers to stay proactive and provide the necessary guidance and assistance needed to educate clients, increase confidence and help them enter and navigate the market.”

However, net deposit flows by households into national savings and investment (NS&I) rose to £7.7bn in September, which is the highest figure since August 2020, following a rise of just £0.7bn in August.

Head of personal finance at AJ Bell, Laura Suter, added: “The inflows of £7.7bn mean NS&I hit its entire annual fundraising target of £7.5bn in one month – which is a sharp turnaround from the outflows we saw from the provider in the summer. Having clinched its fundraising needs, it’s now unlikely we’ll see another bumper interest rate from NS&I this tax year. Unless it suffers heavy outflows or the government changes its targets, it won’t need to offer a market-beating rate to draw new customers in.

“NS&I has clearly been eating some of the other banks’ lunch, as flows into fixed rate bonds with banks and building societies slowed in September. The month saw £5.3bn of money flow into the accounts, a sharp drop from £8bn in August.”

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