(fxcue news) - UK mortgage approvals increased to the highest level in more than two years in October as falling interest rates boosted housing market activity but consumers became more cautious about borrowing and saving ahead of the Autumn Budget. Mortgage approvals for house purchases, an indicator of future borrowing, increased to 68,303 in October from 66,115 in the prior month, the Bank of England reported Friday. This was the highest level since August 2022. Approvals were expected to fall to 65,000. The effective interest rate, which is the actual interest paid on newly drawn mortgages slid 15 basis points to 4.61 percent in October. This was the lowest level since May 2023. Approvals for remortgaging climbed for the third straight month, to 31,400 in October, data showed. After a decline in September, net borrowing by mortgage debt rose by GBP 0.9 billion to GBP 3.4 billion. Net mortgage lending growth improved to 1.1 percent, continuing the upward trend observed since April. Gross lending increased to GBP 20.2 billion in October from GBP 19.5 billion in the prior month. Meanwhile, net consumer credit dropped to GBP 1.1 billion in October from GBP 1.2 billion in the previous month. Within this, net borrowing through other forms of consumer credit fell to GBP 0.6 billion, while net borrowing through credit cards rose to GBP 0.5 billion. Further, net borrowing by businesses increased to GBP 3.9 billion from GBP 0.1 billion in September, BoE said. Data today suggest that budget worries prompted households to become more cautious with their borrowing and saving, Capital Economics' economist Ashley Webb said. The economist noted that November's weak activity data signals that the tax increases announced in the Budget restrained consumer spending this month too. Webb cautioned that unless consumer confidence rebounds quickly, the economy may not expand quite as quickly as expected in the fourth quarter.