(Bloomberg) -- UK mortgage approvals fell more than forecast in August as the housing market slowdown gathered pace. 

Banks and building societies gave the green light to 45,354 home loans, the fewest in six months, as high interest rates continued to stymie demand, Bank of England data showed. 

It was down from 49,532 the previous month and the second straight monthly decline. Economists had expected approvals to fall to 47,400.

The figures add to evidence that the surge in mortgage costs is weighing heavily on the property market with lackluster demand triggering house price falls. 

Data from Nationwide Building Society suggest prices tumbled 5.3% in the 12 months to August, the fastest pace since 2009, with more gloomy data from the mortgage lender for September expected on Monday. 

After surging again earlier in the summer, mortgage rates have started to cool off the back of falling inflation and the Bank of England pausing its interest rate-hiking cycle. 

However, borrowing costs for homeowners and buyers remain much higher than before inflation took off. The average 2-year fixed mortgage rate was 6.5% on Wednesday, according to Moneyfacts.

“The drag from higher interest rates is starting to weigh more heavily on activity,” said Ashley Webb, UK economist at Capital Economics. “This effect will intensify as the Bank of England keeps rates at their peak until late in 2024 and the full impact of previous rate hikes is eventually felt.”

Consumers took out £1.6 billion ($2 billion) on unsecured credit, such as credit cards and personal loans, up from £1.3 billion the previous month. Some of the increase may reflect people resorting to debt to cope with the cost-of-living crisis.

The BOE’s data also showed that households pulled £300 million out of banks and building societies as they continued to move their money from easy access accounts that pay lower interest into time deposits offering better returns.

Britain’s broad money supply fell for the first time in at least 13 years, a signal monetarist economists are reading as a possible sign of recession.

M4 excluding intermediate other financial corporations — a closely watched measure of money supply — contracted 0.6% in August compared to a year earlier.

(Adds data on deposits)

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