According to data reported by the Bank of England on June 29 local time, in May this year, the number of mortgage loans approved by British lending institutions dropped to the lowest level since December 2023. Additionally, consumer credit growth was lower than expected. These figures reveal the impact caused by rising borrowing costs due to the US-Iran conflict.
The Bank of England said on the same day that in May this year, a total of 56,205 mortgage applications were approved, which is lower than the 66,034 cases in April. Economists who responded to a Reuters survey had previously estimated that the number of approved mortgage applications in May would reach 62,900.
Data shows that consumer unsecured loans increased by 1.662 billion pounds in May, which is lower than the expected increase of 1.8 billion pounds by economists, and represents the smallest increase since December 2025. In terms of three-month moving averages, the growth rate of consumer credit is the slowest since October 2025, with a year-on-year increase of 8.7%.
March 13, 2026, London, England - The average interest rate for two-year fixed mortgages in the UK rose above 5% due to conflict and economic uncertainty in the Middle East and Iran. Several financial institutions paused mortgage transactions. IC Photo
Mortgage brokerage firm Knight Frank Finance's managing partner, Simon Gammon, said, "In March and April, the real estate market performed quite solidly, with the amount of mortgages issued remaining at long-term averages. However, data for May shows for the first time that more and more borrowers are becoming cautious."
He added, "Given the uncertainty of inflation, the rising cost of living, and the weakening consumer confidence, this situation is not unexpected."
Gammond pointed out that if the agreement reached between the United States and Iran earlier this month can be maintained, it could help ease the pressure on mortgage rates. However, he warned that there is still uncertainty about the person who will succeed British Prime Minister Sturmey, and this could jeopardize the recovery process.
According to Reuters, since the start of the US-Iran conflict, rising mortgage rates and a decline in consumer confidence have led to a fall in housing prices and a decrease in demand for homes.
The Bank of England stated that the monthly net amount of mortgage loans, which reflects the completion of housing purchase transactions and usually lags behind mortgage approval data, dropped to £2.889 billion in May, the lowest level in a year. This figure is lower than the net increase of £4.439 billion recorded in April.
