Mortgage approvals for house purchases fell to 59,999 in January, the lowest level in two years, according to Bank of England data released today. The decline signals continued buyer caution despite modest improvements in affordability and expectations of further rate cuts later this year.
Buyers remain cautious despite improving conditions
Remortgaging activity also dipped slightly, with approvals falling to 38,100 in January from 38,400 in December. The figures suggest that both purchasers and existing homeowners are taking a wait-and-see approach despite lower mortgage rates than a year ago.
Lucian Cook, head of residential research at Savills, said house prices are “still falling on an inflation adjusted basis” despite nominal growth of 1 percent annually. “This is contributing to a gradual improvement in affordability, particularly across London and the south,” he said. “However, against the current economic backdrop, many prospective buyers remain cautious about taking advantage of that improved position.”
Cook added that activity in the market above £1 million remains 3.2 percent lower than a year ago, indicating “a slow bottom-up market recovery” rather than a broad-based rebound.
This follows Landlord Knowledge’s report on mortgage lending hitting post-pandemic highs for first-time buyers, suggesting the slowdown is concentrated among existing homeowners and investors rather than new entrants to the market.
Geopolitical risks cloud rate cut outlook
Simon Gammon, managing partner at Knight Frank Finance, said lingering economic uncertainty from the November Budget continues to affect buyer confidence. “The outlook for activity and rates appeared relatively benign only last week, but conflict in the Middle East has introduced fresh uncertainty,” he said.
Gammon warned that 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 buyers remain nervous despite improving conditions. “On the ground the amount of choice, particularly of flats, is encouraging more first-time buyers to transact,” he said, noting that supply is helping to offset affordability pressures.
Nathan Emerson, chief executive of Propertymark, reported that member agents have seen a near 25 percent increase in viewings per available property compared to twelve months ago. However, he observed: “We are yet to see this heightened activity fully translate into completed transactions, reflecting an evident degree of caution among consumers.”
Richard Donnell, executive director at Zoopla, said the data aligns with a “sustained recovery in sales since 2023 now starting to plateau.” He noted that 8 percent fewer buyers are active in the market than last year, yet mortgage demand is just 1 percent lower, suggesting those who are searching are more committed.
What this means for landlords
- Tenant demand may hold: Fewer mortgage approvals suggest some would-be buyers are staying in the rental market longer, supporting occupancy rates.
- Watch for: Today’s Spring Statement could signal government intentions on housing – any tax changes could affect both buyer sentiment and landlord costs.
- Rate expectations: Middle East tensions could delay Bank of England rate cuts, keeping buy-to-let mortgage rates elevated for longer than expected.
- Bottom line: The slow transaction environment benefits landlords with stable tenants but makes portfolio expansion more attractive for those with cash reserves.
Editor’s view
A two-year low in mortgage approvals sounds alarming, but for landlords it is a mixed signal. Weaker buyer activity keeps tenants in the rental market longer, supporting demand. However, the same caution affecting buyers is likely affecting landlord investors too. Those with strong cash positions and patient timeframes may find opportunities as competition for properties eases – provided they can stomach geopolitical uncertainty and the regulatory drag of the Renters’ Rights Act.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 3 March 2026
Sources: Bank of England, Savills, Knight Frank Finance, Propertymark, Zoopla
Related reading: House prices hold steady as BTL activity edges higher
