Falling rates support rise in market activity, new figures reveal
Mortgage approvals for house purchases in the UK increased by 900 to 64,200 in June, according to the latest Bank of England Money and Credit data.
Approvals for remortgaging with a different lender also rose, up by 200 to 41,800, marking the highest level since October 2022.
Net borrowing of mortgage debt by individuals climbed by £3.1 billion to £5.3 billion in June, compared to a £2.2 billion increase in May. The annual growth rate for net mortgage lending edged up from 2.6% to 2.8%.
Gross lending reached £23.9 billion in June, up from £20.6 billion the previous month, while gross repayments also increased to £18.8 billion from £17.6 billion.
The effective interest rate on newly drawn mortgages fell for the fourth consecutive month, reaching 4.34% in June from 4.47% in May. In contrast, the rate on outstanding mortgage balances rose slightly to 3.88% from 3.87%.
“This is a positive sign at a time when there is a poor economic outlook in general and potential tax rises on the way,” said Nathan Emerson (pictured far left), chief executive of industry body Propertymark. “The Chancellor’s recent Leeds Reforms sent a positive signal to the mortgage market, which should encourage many lenders to focus new products and services towards those on lower incomes to help them take their first step onto the housing ladder.”
Emma Cox (pictured second from left), managing director of real estate at specialist lending bank Shawbrook, said that while the latest figures reflect positive news, affordability continues to be a pressing issue for home buyers, especially in populated cities where high property values are pricing many prospective buyers out of deals.
“While there are moves to make homeownership more achievable, it still remains unobtainable for many, and heavy demand is being placed on the rental sector as a result,” she stressed. “This presents opportunities for professional landlords who are looking to capitalise on demand and expand their portfolios.
“The rental sector is still crying out for quality properties, and private landlords have a key role to play in catering for the market. The recent promises to slash red tape and accelerate housebuilding should provide added confidence for the months ahead.”
According to Tomer Aboody (pictured second from right), director at specialist lender MT Finance, “another rate cut this year would encourage further activity.”
“Although transaction numbers are increasing, they’re still lower than previous years which is of course much to do with higher stamp duty and taxes imposed by the Chancellor in her last budget,” he said. “Encouragement is needed to boost activity and fuel the economy, which can either come via a restructure of stamp duty and/or restructure of taxes.”
However, for Stephanie Daley (pictured far right), director of partnerships at mortgage adviser Alexander Hall, “this positive trend is expected to build throughout the rest of the year, with affordability improving thanks to a series of recent initiatives.”
“The decision to make the Mortgage Guarantee Scheme permanent is a key step forward, giving lenders greater confidence to support buyers with smaller deposits,” she pointed out. “Additionally, recent regulatory changes to loan-to-income caps have provided more flexibility, particularly for smaller lenders and building societies.
“We’ve already seen significant movement from a number of major lenders in response to these changes. These adjustments are not only making mortgages more accessible, but are also helping to enhance the overall affordability landscape for borrowers. As a result, buyers are now in a stronger position to secure more favourable terms, and with lenders continuing to adapt, we expect this momentum to continue.”
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