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UK mortgage approvals slowed substantially in September, figures from the Bank of England showed on Monday.
Approvals for house purchases, an indicator of future borrowing, fell to 66,789 last month from 74,000 in August.
Seb Zickus of Handelsbanken said "the drop in mortgage approvals is no surprise: we already knew that new buyer enquires fell in September and a typical two-year fixed-rate mortgage in October has reached around the 6% mark.
"A recent fall in interest rate expectations could ease rates somewhat in the future, but nonetheless it seems likely that rising interest rates could prompt a fall in nominal UK house price growth in the coming 12 to 18 months," Zickus added.
The 'effective' interest rate the actual interest rate paid on newly drawn mortgages increased by 29 basis points to 2.84% in September.
Net borrowing of mortgage debt remained at £6.06 billion in September, unchanged from the previous month, the Bank of England said.
Consumers borrowed an additional £740 million in consumer credit, below the additional £1.2 billion borrowed in August. This was entirely driven by "lower credit card borrowing", the central bank noted, with just of £100 million borrowed in September against £700 million in August.
Households deposited an additional £8.1 billion with banks and building societies in September, compared to £3.2 billion in August. This was the biggest increase of household deposits since June 2021.
Zickus said these figures suggest that many consumers are "increasing their savings in anticipation of growing costs associated with inflation and mortgage rates."
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