Mortgage approvals down to 56,200 in May

May’s mortgage slowdown is a clear sign that buyers are sitting on their hands. The talk of increasing rates is putting people off, but the precarious political backdrop adds another layer of caution. When households are unsure what taxes, rates and policy will look like after the dust settles, moving home becomes easier to delay. The sharp fall in remortgage approvals also suggests borrowers are not rushing unless they have to, with many facing a painful hike from older, cheaper deals. This is not a housing crash signal, but it does show a market short on confidence and highly sensitive to uncertainty. Over the next few months, activity is likely to remain patchy- demand is there, but buyers need clearer politics, firmer rate-cut expectations, a better housing policy and more realistic pricing before momentum returns.

These May figures are a rear-view mirror. They capture the nerves of the spring, when the conflict in the Middle East sent funding costs spiking and political uncertainty at home left buyers sitting on their hands rather than committing, which is exactly why both purchase and remortgage approvals dropped back.

The mood I'm picking up from clients now is a world away from that. Tensions in the Middle East have calmed, lenders like NatWest and Santander are trimming fixed rates again, and a fresh approach in government has given people a reason to feel more positive, so I'd expect approvals to climb back through the summer as that confidence filters down to the front line.

With events in the Middle East sending mortgage rates north, it's been a turbulent first half of the year for the property market and sentiment has inevitably suffered. People have been worried about inflation and many have decided to sit tight. But lenders are now cutting rates and things are looking better for the second half of the year as confidence returns. It could be a busier than usual late summer period if rates continue to nudge down.