Property buyer activity showed signs of caution in January, with mortgage approvals falling to a two-year low, according to the Bank of England.
The Bank’s Money and Credit report recorded 59,999 approvals for house purchases in January 2026, the lowest level since 55,946 in January 2024. Approvals for remortgaging with a different lender also edged down, falling to around 38,100 from 38,400 in December 2025.
Meanwhile, Nationwide Building Society reported steady house price growth in February, with the average UK property rising 0.3% month-on-month and 1.0% annually, reaching £273,176.
Lucian Cook, head of residential research at Savills, said: “With nominal house price growth running at just 1%, prices are still falling on an inflation adjusted basis.
“This is contributing to a gradual improvement in affordability, particularly across London and the south. However, against the current economic backdrop, many prospective buyers remain cautious about taking advantage of that improved position.”
“At the top end of the market, activity above £1m remains down 3.2% year‑on‑year. This increasingly points to a slow bottom‑up market recovery,” he added.
The fall in mortgage approvals fell in January reflects the economic uncertainty that lingered after the November Budget and weighed on borrower confidence, according to Simon Gammon, managing partner, Knight Frank Finance.
He commented: “”The outlook for activity and rates appeared relatively benign only last week, but conflict in the Middle East has introduced fresh uncertainty. Any spike in oil prices could fuel global inflation or, at the very least, prompt central banks, including the Bank of England, to delay further rate cuts until the outlook becomes clearer.”
Jeremy Leaf, north London estate agent, said: “Clearly buyers are still nervous despite expectations that inflation and mortgage rates will continue along a downwards path. On the ground the amount of choice, particularly of flats, is encouraging more first-time buyers to transact.”
Richard Donnell, executive director at Zoopla, remarked: “The latest mortgage approvals data align closely to the overall trends in the housing market with a sustained recovery in sales since 2023 now starting to plateau.
“Zoopla data shows 8% fewer buyers in the market than last year yet demand for mortgages is just 1% lower than a year ago. This is in line with the change in the number of housing sales being agreed which are just 2% down on last year with strong demand from first time buyers supported by the lowest mortgage rates for 4 years and less onerous assessments of mortgage affordability.
“We believe that strong competition in the mortgage market will continue to support home buyers demand in the coming months.”
Nathan Emerson, CEO of Propertymark, added: “As we progress further into 2026, we are continuing to see movement across the housing market, though the latest figures suggest a period of moderation rather than acceleration.
“Encouragingly, Propertymark member agents are reporting a near 25% increase in the number of viewings per available property compared to twelve months ago, demonstrating that buyer interest is clearly present. However, we are yet to see this heightened activity fully translate into completed transactions, reflecting an evident degree of caution among consumers.
“Although affordability conditions have improved compared to a year ago, many buyers are still carefully assessing their financial position before committing. We anticipate confidence will strengthen gradually as stability around borrowing costs continues to filter through, but for now the market is adjusting at a steady and measured pace.”
