Mortgage approvals slumped to their lowest level in July in more than two and a half years, as high borrowing costs weigh on the housing market.

New figures from the Bank of England show that only 56,100 mortgages were approved in July, down from 58,200 in June. 

This is the lowest number since January 2024, when only 56,032 mortgages were approved. 

It comes as the war in Iran and jitters in global bond markets have pushed up borrowing costs, making it more costly for families to take out a mortgage. 

Nationwide research also shows that house prices fell by more than £1,000 between July and August, though the bank said that once adjusting for seasonality it represented a 0.2pc rise. 

Prices are up 1.6pc on the year. The figures suggest high borrowing costs are keeping a lid on the market, but a lack of available homes is preventing further falls. 

Experts said it underlined that Britain’s housing market is “stuck in the slow lane”. 

Anthony Codling at RBC Capital Markets said: “Geopolitical tensions in the Middle East are keeping energy prices and market interest rates elevated, casting a shadow over consumer confidence and mortgage affordability. 

“The good news is that wage growth continues to outpace house price growth, so affordability is, quietly and gradually, improving. The bad news is that higher mortgage rates are eating into those gains.”