The 65,352 approvals recorded mark the highest total since January 2025.

This rise in activity comes as Nationwide Building Society reported a slight dip in UK house prices of 0.1% in August, noting that affordability remains a significant challenge relative to household incomes.

Analysts suggest that while improving mortgage pricing and stronger wage growth have supported the market this year, the outlook is becoming more cautious. Experts point to stubborn inflation, uncertainty over further Bank of England interest rate cuts, and potential tax rises in the upcoming Budget as factors that could dampen activity. A handful of lenders have already begun to raise their mortgage rates in response to these economic headwinds.

The Bank of England’s report also highlighted wider financial trends. The annual growth rate for consumer credit, including credit cards and personal loans, increased to 7.0%. Stepchange Debt Charity linked this to the rising cost of living, warning that more people may be relying on credit to cope with essential bills.

In a more positive development for prospective home-buyers, some lenders are adjusting their policies to improve affordability. HSBC UK, for example, has increased its loan-to-income multiple to 5.5 times salary for certain first-time buyers, a move designed to give them more financial firepower.

The report also showed that households deposited an additional £7.3 billion with banks and building societies in July, while UK businesses significantly increased their borrowing.