Data from the Bank of England shows a significant slowdown in housing activity during the month, with total borrowing falling from £4.4bn to £2.9bn – well below the recent trend.
When it comes to the number of mortgages approved for home purchases, this fell to 56,000 after six months when it averaged 63,300.
Remortgage rates also fell, with 33,300 people moving to a new mortgage in May compared to 51,200 deals in April.
These numbers coincide with the period following the outbreak of war in Iran, when mortgage rates rose and continued uncertainty affected consumer confidence.
As such, most experts believe that this decline in mortgage approvals could just be a slowdown rather than a major downturn in the market.
Rachel Springall, financial expert at Moneyfactscompare.co.ukHe said it was a “natural calm” given the recent turmoil in the mortgage market.
She added: “Mortgage rates are starting to fall from their highs in April, so we hope that this will slowly gain momentum in the coming months, and borrowers will no doubt be hoping for more stability in the market.
“Those seeking a new deal are looking at repayments of £1,541 per month, based on a typical two-year fixed mortgage at 5.54% on a £250,000 loan, for 25 years.
“That’s a difference of £750 over 12 months, compared to an average rate of 5.12% in June 2025.”
With the decline in May, one broker — Omar Mohamed, managing director of Wheeling-based Trinity Finance — told Newspage that could mean there is now pent-up demand, suggesting there will be an increase in activity going forward.
“Although this data shows a slowdown in mortgage approvals, the lack of activity in the first half of the year due to the war may see a volatile impact through the rest of 2026 as demand returns,” he explained.
“There is a lot of pent-up demand, with many people putting their plans on hold amid economic uncertainty, and as this demand increases it could reignite approval levels in the coming months. Mortgage approvals may be down but mortgage demand is far from over.”
But others thought it might take some time for activity to recover. “The sharp decline in remortgage approvals also suggests borrowers are not rushing unless they have to, with many facing a painful uptick from older, cheaper deals,” Samuel Mather Holgate, managing director and IFA at Mather and Murray Financial, told Newspage.
“This is not a sign of a housing collapse, but it shows that the market lacks confidence and is extremely sensitive to uncertainty.
“Over the next few months, activity is likely to remain erratic – demand is there, but buyers need clearer policies, tighter interest rate cut expectations, better housing policy and more realistic pricing before momentum returns.”
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