Mortgage approvals for house purchases fell by 2,400 to 65,700 in November from the previous month, according to the Bank of England.
However, the central bank points out that this figure remains above the previous 12-month average of 60,400 in its latest Money and Credit report.
Remortgages to a new lender slipped by 300 to 31,200 in November, but remains above their previous 12-month average of 30,000.
The survey adds that mortgage borrowing fell by £1bn to £2.5bn in November, following an increase in net borrowing of £1bn in October.
The annual growth rate for mortgage lending rose to 1.3% in November from 1.1% in October, continuing the upward trend since April 2024.
The report adds that gross lending increased to £20.7bn in November, from £20.3bn in October, “and little has changed in gross repayments at £18bn in November”.
The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages fell by 11 basis points, to 4.5% in November, the lowest since April 2023.
The data comes after last month, Bank of England governor Andrew Bailey said he expects four 0.25% “gradual” cuts next year, moving the base rate from its current 4.75% mark.
Last year the UK central bank made two 0.25% cuts, while inflation currently stands at 2.6%.
SPF Private Clients chief executive Mark Harris says: “Mortgage approvals for new purchases slipped, which comes as a surprise and suggests ups and downs for the market in coming months rather than a steady improvement.
“Remortgaging numbers dipped very slightly, but this could mean more borrowers stuck with their existing mortgage providers rather than switching to a new lender.
“The effective interest rate paid on new mortgages decreased again to 4.5% as lower pricing at the time is reflected in the official figures. With a number of lenders cutting rates this week, this may dip further in coming months if others follow suit.”
MT Finance director Tomer Aboody points out: “The decline in net mortgage approvals after months of increases shows we can take nothing for granted, with consumer confidence perhaps taking a hit after the Budget.
“Further interest rate cuts, which are expected in the new year, should help boost those numbers and get them back on track.
“Despite lower borrowing rates, we are still living in a higher cost environment than most of us are used to.
“Sellers may try to charge a premium because the cost of everything is higher but are likely to find that buyers aren’t prepared to pay it.”
Propertymark chief executive Nathan Emerson adds: “The impact of higher interest rates without doubt has had a profound impact across the housing market.
Consumers need to feel a degree of confidence within their financial position to approach the buying and selling process, and it is essential that aspects such as inflation are managed robustly to keep long-term stability across the economy, which is needed for a healthy and secure housing market.
“Propertymark is keen to see interest rates lowered further when conditions permit to help spur growth in 2025.”
