The UK housing market saw a notable easing in borrowing costs last week, with the average rate on 30-year fixed mortgages for loans under $832,750 slipping to 6.09%, down from 6.17%.
This marks the lowest level in nearly four years and reflects a broader pullback in interest rates after a prolonged period of tight financial conditions.
Despite the drop, overall mortgage demand barely budged, with total application volumes rising just 0.4%, suggesting that lower rates alone are not yet enough to reignite buyer enthusiasm.
Refinancing activity continued to benefit the most from the decline in rates.
Applications to refinance climbed 4% week over week and surged roughly 150% compared with the same period last year, when borrowing costs were significantly higher.
Many homeowners appear eager to lock in savings as rates retreat, even though refinance activity had been unusually muted a year ago, making the annual gains look especially large.
At the same time, some borrowers are increasingly turning to adjustable-rate mortgages, attracted by rates that remain substantially below those of traditional fixed loans.
In contrast, demand from prospective homebuyers softened. Purchase mortgage applications fell 5% from the previous week, though they remain modestly higher than a year earlier.
While improving mortgage rates have helped ease affordability pressures, elevated home prices and ongoing economic uncertainty continue to weigh on consumer confidence.
This hesitation is also showing up in the sales market, where a growing share of deals are being canceled, highlighting that many buyers are still reluctant to commit despite the most favorable borrowing conditions seen in years.
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