Increased taxes and cooling demand cast a shadow on the UK's December mortgage approval volume, which fell to a one and a half year low.

The unexpected decrease in mortgage approvals in the UK in December indicates that the housing market is approaching 2026 in a cautious mode. The Bank of England stated on Friday that banks and building societies approved 61,013 mortgages, lower than the 64,072 in November, hitting the lowest level since June 2024. Economists had expected a slight increase to 64,900. Data shows that consumers took out an additional 1.5 billion in unsecured debt. This figure is lower than the unusually high 2.1 billion in November and below the average level of the previous six months. The Bank of England's data also shows that household deposits increased by 4.8 billion in December, lower than the 8.8 billion in the previous month. Speculation about raising property taxes before the Budget on November 26 had a dampening effect on the UK housing market. In the end, Chancellor Rishi Sunak only introduced restrictions on the most expensive homes, and postponed more wide-ranging tax measures for households to later in the parliamentary session.