UK mortgage demand drops to 32-month low as Iran war drives up borrowing costs
Summary
UK mortgage approvals for new home purchases dropped to the lowest level in nearly three years in August. This fall is linked to rising borrowing costs caused by higher oil prices after the war in Iran, which raised mortgage interest rates and reduced housing demand.Key Facts
- Only 54,918 new home mortgage approvals were recorded in August, the lowest since December 2023.
- Mortgage interest rates increased from 4.45% in July to 4.60% in August.
- Rising oil prices due to the Iran war pushed up energy costs and mortgage borrowing costs.
- Lending for home purchases fell by 15% compared to August of the previous year.
- Remortgage approvals dropped slightly from 34,600 in July to about 34,000 in August.
- The average five-year fixed mortgage rate reached 5.94%, the highest since October 2023.
- Two-year fixed mortgage rates also rose, hitting 5.93%, the highest since July 2024.
- Experts believe higher mortgage rates will continue to reduce housing market activity despite government support programs for first-time buyers.
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