Mortgage lending rose sharply in September as homebuyers took advantage of easing borrowing costs and greater market confidence ahead of the Autumn Budget, according to the latest Money and Credit data from the Bank of England.
Net borrowing of mortgage debt by individuals climbed to £5.5 billion, up from £4.3 billion in August and marking the highest level since March 2025.
The annual growth rate for mortgage lending rose to 3.2%, its strongest pace since January 2023.
Gross mortgage lending totalled £24.9 billion in September, compared to £23 billion the previous month, while repayments also edged higher to £20.3 billion.
INCREASED ACTIVITY
Mortgage approvals for house purchase – a leading indicator of future activity – increased slightly to 65,900, their highest in five months.
However, approvals for remortgaging dipped by 600 to 37,200, suggesting many borrowers are opting to stay with their existing lenders as competition among banks and building societies intensifies.
The average rate paid on newly drawn mortgages fell for a sixth consecutive month, dropping by 7 basis points to 4.19%, the lowest level since January 2023. The rate on the stock of outstanding mortgages was unchanged at 3.89%.
MODEST REVIVAL
Economists said the figures pointed to a modest revival in the housing market as expectations of rate cuts in 2026 continue to build.
Elsewhere, consumer credit growth softened slightly, with net borrowing falling to £1.5 billion from £1.7 billion in August.
Within that, credit card borrowing was steady at £0.7 billion, while other personal loans and car finance fell to £0.8 billion.
Despite the monthly dip, annual growth in consumer credit ticked up to 7.3%, with credit card borrowing rising 10.8% year-on-year.
Meanwhile, households continued to build savings, depositing £7.9 billion with banks and building societies in September – largely into easy-access and ISA accounts.
The figures suggest that, while consumers remain cautious, falling mortgage rates and a more stable economic outlook could support a gradual recovery in housing market activity through the final quarter of the year.
INDUSTRY REACTION
Richard Donnell, executive director at Zoopla, said: “Demand for mortgages to buy homes continues to increase but at a slowing rate as the rolling total over the last 12 months starts to level off as housing transactions reach close to their 10 year average of 1.2m.
“While Budget speculation has hit demand and sales for homes over £500,000, the rest of the market is less affected which explains the continued demand for mortgages.”
APPETITE AND DEMAND
John Phillips, CEO of Just Mortgages and Spicerhaart, said: “While there has been plenty of talk of a holding pattern pre-Budget, today’s figures show that this isn’t the case for all borrowers.
“An increase in approvals in September demonstrates the appetite and demand that still exists in the market – whether that’s those pushing ahead with plans, or perhaps more likely, those that need to move rather than necessarily wanting to right now.
“Either way, the figures reflect what we are seeing across our estate agency branches and our brokerage with relatively robust figures for new buyer registrations, valuation requests and mortgage appointments.
“We are seeing an element of wait and see right now.”
“There’s no doubt we are seeing an element of wait and see right now, which hopefully gives way to some pent-up demand once the Budget is cleared and everyone knows the lay of the land.
“With these figures in mind though, the message to brokers is to remain on the front foot and be there to support those that are navigating the market. Just as important is the role we play in nurturing confidence among clients, highlighting the many opportunities available and encouraging them to push on with their plans.”
LENDERS KEEN TO LEND
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “With mortgage approvals picking up again in September, the underlying resilience of the housing market is in evidence despite many challenges facing it.
“The effective interest rate paid on new mortgages fell to 4.19 per cent in September and since then, we have seen some lenders trim their mortgage rates further. However, with the rate on the outstanding stock of mortgages unchanged at 3.89 per cent, affordability remains a concern for many.
“The good news for borrowers is that lenders are keen to lend and have the funds available to do so. Falling Swap rates, which underpin the pricing of fixed-rate mortgages, are encouraging some of the big names to reduce mortgage rates as they look to pick up more business before the year end.
“Remortgaging numbers fell, suggesting that borrowers may be sticking with their existing lender and refinancing rather than going through the hassle of another mortgage application with a new lender.”
WAIT AND SEE APPROACH
Tomer Aboody, director of specialist lender MT Finance, said: “The ongoing uncertainty with regard to the upcoming Budget is inevitably resulting in buyers and sellers adopting a ‘wait and see’ approach.
“Despite cheaper borrowing rates, transactional levels remain stunted. This further underlines the case for the Chancellor taking action in her Budget to reduce or reform stamp duty in order to allow the market to really start to function effectively, which in turn will help strengthen the wider economy.”
WELCOME SHOT IN THE ARM
Richard Pike, chief sales and marketing officer at Phoebus, said: “The latest Money and Credit figures from the Bank of England show the mortgage market bounced back strongly in September, with net mortgage borrowing reaching its highest level since March.
“It’s customary to see a second surge in the property market after the summer, but nonetheless this is a welcome shot in the arm for lenders, with approvals for house purchases also at their highest since the spring.
“The drop in remortgage approvals for a fourth consecutive month highlights that many borrowers are still holding off making decisions. In particular, those coming off five-year fixed mortgages in the coming months will be waiting with bated breath to see if rates fall.
“With the current uncertainty in the market, it will be interesting to see how borrowing will be impacted over the coming months.”
STABILITY NEEDED
Simon Webb, managing director of capital markets and finance at LiveMore, said: “Buyer interest remains robust as we emerge from the summer slump, but clearly there is ongoing pent-up demand.
“What the market needs most is a period of stability in monetary policy so the MPC’s decision next week and the outcome of the Autumn Budget will be key.
“For later life lending, the opportunity is clear. Borrowers aged 50 to 90+ still face limited awareness of their options, but demand is there. At LiveMore we continue to broaden access to a full spectrum of later life products, helping to keep housing transactions moving and enabling older borrowers to participate fully in the market.”
BUDGET JITTERS
Mark Tosetti, CEO of CAL (part of Movera), said: “An uptick in net borrowing and slight increase in net mortgage approvals indicates that there is still strong demand in the market and that we have emerged, tentatively from a slow summer.
“But the looming Autumn Budget is clearly continuing to put a damper on consumer confidence, with the latest data from Zoopla – released earlier this week – suggesting buyer demand is down 8% compared with last year and sales agreed have fallen by 3%.
“However, as inflation fell short of the Bank of England’s 4% forecast this month, the MPC’s base rate decision next week could provide a lifeline for the sector and generate some more attractive interest rates from lenders.”
LACK OF MOVEMENT
Colin Bell, founder and COO of Perenna, said: “Another rise in approvals is generally seen a positive for buyers, but it is ultimately masking the complete lack of movement and progress in the market.
“It has only been temporary measures that have previously caused an increase in lending of any significance, the last being the stamp duty holiday during the pandemic which drove affordability.
“Seasonality also makes small moves look larger than they really are. We need a far more stable and long-term solution for the market if we’re going to get people on the property ladder.
“With inflation remaining sticky, we cannot rely on people jumping on lower rates to buy when this is unlikely to happen any time soon. We are better off accepting that we are likely to remain in a higher rate environment at least in the medium term, and we need reform that reflects that, address issues with stress testing and create space for innovative solutions that provide borrowers with the long-term stability they crave and allows them to have much greater control over their financial lives.”
STICKY INFLATION
Joe Pepper, UK CEO at PEXA, said: “Sticky inflation and interest rates remaining has created a little bit of apathy in the market – people are no longer waiting for a better rate environment to buy or remortgage because they aren’t necessarily expecting this to happen any time soon.
“Empowering more individuals to confidently mortgage and remortgage.
“We are also starting to see the positive impact of affordability measures introduced earlier this year and it is positive to see the market start moving in the right direction.
“However, as mortgage approvals increase, bottlenecks form across the market because the technology that sits behind the transaction process simply isn’t up to the job.
“Conveyancers, who are already under significant strain, will be pushed to their limits because they don’t have the right tools and technology in place to help them deal with demand.
“We need far greater attention placed on reforming the back-end infrastructure that supports the process to overcome this, delivering a more certain, secure and streamlined process. Addressing this could not be more urgent if we are going to maintain growth and reap the benefits.”
DECISIONS ON HOLD
Ian Futcher, financial planner at Quilter, said: “While the data paints a positive picture of September, the mood in the market has since shifted. With the Budget now fast approaching and rumours brewing about potential changes to housing taxes or stamp duty reliefs, many people are growing more cautious.
“Decisions about buying or selling a home are increasingly being put on hold until there is greater clarity on what the Chancellor will do. A small recent rise in mortgage rates has only reinforced that sense of hesitation.
“These figures capture the last of the late-summer confidence before pre-Budget uncertainty set in.
“Many people are now pressing pause on big decisions until they know whether upcoming policy changes will alter the costs of owning property or moving home. For households trying to plan, staying informed and waiting for full details before making major financial moves could prove wise in the weeks ahead.”
