Mortgage approvals fell to a two-year low in July

Mortgage approvals are the clearest early signal we have of how many buyers are actually able to buy, rather than how many are looking. When that number drops, it changes who is in the market for your home, and it changes nothing about what your home is worth on paper.

What exactly did the Bank of England report?

A mortgage approval is a lender formally agreeing to lend on a specific property purchase. It sits between a buyer applying and a sale completing, so it is a forward look at sales that will complete over the next few months.

The Bank of England published its Money and Credit release for July 2026 on 1 September 2026. Approvals for house purchase came in at 56,053, the lowest monthly figure since January 2024, when 56,032 were approved. The six-month average is around 60,800, so July ran roughly 8% below the recent run rate.

Two lines in that table move in opposite directions and together they tell the story. Fewer people were approved to buy, and the ones who were approved paid more for their money.

Why are approvals falling when buyer interest is rising?

Because interest and affordability are different things. Zoopla's House Price Index published on 27 August 2026 found buyer searches running 7% above the same point last year, higher than a year earlier in every region and country of the UK for the first time since August 2025, while agreed sales sat 6% below last year.

Buying power is the amount a buyer can borrow and spend under current rates and lending rules. Zoopla put the effect of higher mortgage rates at a 9% reduction in buying power, and Rightmove's mortgage tracker on 17 August 2026 showed the average two-year fixed rate at 5.09%, up from 4.95% a year earlier.

• More people are browsing, which is why viewing numbers can still feel healthy.
• Fewer of those people clear a lender's affordability test at current rates.
• The ones who do clear it are stretching further, so they negotiate harder.

Does this mean house prices are about to fall?

Not on the evidence so far. Nationwide reported on 1 September 2026 that the average UK house price rose 0.2% in August to £275,465, with annual growth of 1.6%, up from 1.4% in July.

Asking prices are a different measure and they have moved the other way. Rightmove reported on 17 August 2026 that new sellers cut asking prices by 2.0%, or £7,360, to an average of £364,999, the largest August fall since 2018, with the number of homes for sale at a 12-year high for the time of year.

• An asking price is what a seller hopes for on the day the home is listed.
• A sold price is what a buyer and a lender agreed to pay once the money was real.
• Falling asking prices with steady sold prices usually means sellers are pricing to meet the market rather than the market collapsing.

What should I do if I am selling right now?

1. Price against sold evidence on your own street from the last six months, not against what is currently listed and unsold nearby.
2. Ask your agent how many of the enquiries on your home have a mortgage in principle behind them, and treat that as the real level of interest.
3. When you get an offer, ask what the buyer has already done rather than what they intend to do: a full application submitted, a solicitor instructed, a survey booked.
4. Keep your own costs and commitments in step with your buyer's, and hold the larger, harder-to-reverse spends until they have put their own money down.
5. Give the sale a realistic runway. A market with fewer approved buyers takes longer to find the right one, and a fortnight of quiet is not a verdict.

A smaller pool of buyers does not make your home worth less. It makes the buyer you choose matter more.

What does this mean if you are buying?

Competition for the right home is lighter than it was, and sellers are pricing more realistically. The trade-off is the rate you will pay, so it is worth checking your borrowing figure again before you offer, because an approval from the spring may not survive today's affordability test.

Where does ValuQ fit in?

ValuQ gives UK homeowners free, side-by-side property valuations from competing local estate agents. In a market where the number of able buyers is falling, the value of seeing several agents' views of your home, their pricing evidence, and their strategy on one screen goes up, because the decision you are making is about who can find and hold on to the right buyer.