Bank of England Mortgage Data: Landlords Lock In Rates While SME Developers Sit on Uncommitted Capital

According to the recently published Bank of England Money and Credit release, net mortgage borrowing eased to £4.3 billion in July, from £7.7 billion in June and below the six-month average of £5.3 billion, while house purchase approvals slipped to 56,100, below the recent average of around 60,800.

That looks, on its face, like a market losing momentum. But dig a little deeper and the evidence points at something else – rather that landlords and property investors are acting ahead of a rate signal, refinancing to lock in known costs. SME developers are doing something closer to the opposite however: sitting on capital they can already access, because the constraint they’re facing isn’t the cost of finance.

New mortgage lending naturally dips every summer – house moves take a back seat to school holidays and family time, and it happens like clockwork most years. The Bank of England’s figures are seasonally adjusted specifically to account for that recurring annual pattern. But even against that adjustment, July’s numbers came in weaker than the recent trend. 

What’s happening alongside it tells a different part of the story: remortgage approvals rose to 34,500 in July, up from 34,100 in June, while the effective rate on newly drawn mortgages climbed to 4.45%, from 4.35%. A small, but significant, data point.

Because taken together, that combination of fewer purchases, more refinancing, and rising rates on new lending is not a market losing confidence. It’s a market repricing risk early, and investors choosing to act on that signal rather than wait for it to resolve.

Mortgage Lending: Why Rates Are Rising Without a Bank Rate Move

The Bank of England held Bank Rate at 3.75% again in July – the fifth consecutive hold – but the vote split changed to 6-3, with three members pushing for a rise to 4%. That’s a meaningful shift in tone. Markets are increasingly pricing the risk of the next move being up rather than down, and mortgage and lending rates are adjusting accordingly, well ahead of any change to the base rate itself.

The rise in remortgage approvals suggests portfolio landlords and property investors are already responding to that signal. Refinancing at today’s rate replaces the uncertainty of what a rate might look like in six or twelve months’ time, if the MPC’s more hawkish members gain ground, with a known cost now — the kind of long-term portfolio planning that’s typical of experienced investors managing exposure through a rate cycle.

SME Lending: Capital Is Available, Confidence Isn’t

Business lending data shows a similar pattern to the mortgage market on the surface: SME borrowing from banks rose to £0.8 billion net in July, up from £0.7 billion in June, with the annual growth rate holding steady at 4.1%, even as the effective rate on new SME loans rose to 6.61%, from 6.36%. That’s aggregate SME lending across all sectors, not development finance specifically, but the steadiness is real – funding for SME businesses generally hasn’t dried up.

Read in isolation, flat growth could look like resilience. For SME housebuilders specifically, it isn’t – and the data backs this up:

HBF and Quantum Development Finance’s Q2 2026 SME Developer Sentiment Survey found development viability had overtaken planning delays as builders’ most significant barrier for the first time, cited by three-quarters of respondents, up from 57% at the start of the year, with over nine in ten reporting a worsened outlook for the year ahead.

The two pictures fit together rather than contradict each other. Capital hasn’t disappeared — steady lending volumes confirm that. What’s changed is which schemes clear the bar. SME developers with access to finance are choosing not to draw on it, more selective about which sites are viable as construction costs, planning timelines and sales assumptions all become harder to pin down eighteen months out. That’s a confidence problem sitting inside a market where the money itself isn’t the constraint – not evidence that rising costs are simply being absorbed without consequence.

Certainty of Execution: Why Speed Now Matters as Much as Price

What July’s data shows is that speed and certainty of execution now matter as much as headline pricing – for different reasons on each side of the market.

Landlords are using certainty to lock in favourable terms before rates move further. SME developers need certainty to justify committing capital they can already access. Lenders who can move quickly and structure around shorter, more flexible terms are relevant to both, even though the underlying problem they’re each solving for is different.

The next MPC decision is due on 17 September — technically live, though swaps price only around a 15% chance of a move there. The more credible pivot point is 5 November, the next forecast-round meeting with a fresh Monetary Policy Report, where market pricing shows the probability of a hike building more meaningfully into December and early 2027. Either way, the working assumption across the market is a cost of capital that stays higher for longer, and landlords appear to be planning on that basis already.

For SME developers, the more pressing question isn’t the cost of capital at all. . . . it’s whether the schemes in front of them will still make sense by the time they’re built.