Demand expected to continue into the latter half of the year
Mortgage approvals for house purchases increased to 62,000 in July – the highest since September 2022 and up from 60,600 in June, according to the latest data from the Bank of England (BoE).
Approvals for remortgaging, which only include remortgaging with a different lender, decreased to 25,100 from 27,300, continuing the downwards trend seen since March 2024.
Net borrowing of mortgage debt by individuals increased to £2.8 billion in July – the highest since November 2022 and up from £2.6 billion in June.
The BoE’s latest Money and Credit report also revealed that the annual growth rate for net mortgage lending rose to 0.6% in July, after a rise to 0.5% in June, continuing the trend seen in previous months.
Gross lending decreased to £19.6 billion in July, from £20.5 billion in June, while gross repayments decreased by £0.9 billion over the same period, to £17.4 billion.
The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages was broadly unchanged at 4.81% in July. The rate on the outstanding stock of mortgages rose by four basis points to 3.69% in July, from 3.65% in June.
“Today’s mortgage approvals suggest that consumer confidence remains buoyant,” said Ryan Davies (pictured left), strategy director at Bluestone Mortgages. “At a time when interest rates have finally fallen from their 16-year historic high and lenders are ramping up the competition to drop their rates, we expect to see demand continue into the latter half of this year.”
Jonathan Samuels (pictured centre), chief executive of Octane Capital, pointed out that we have now seen two consecutive months of positive growth where mortgage approvals are concerned, and this is in addition to the fact that monthly mortgage approvals have remained above the 60,000 threshold since February of this year.
“This suggests a property market that is very much on the up, and we expect this outlook to only improve further following the Bank of England’s decision to cut interest rates for the first time in four years,” Samuels said. “While the reduction itself may have been marginal at 0.25%, it’s likely to act as a floodgate moment for the housing market, with more buyers looking to make their move as the monthly cost of a mortgage continues to ease.”
“Mortgage approvals are always a good indicator of future market direction over the coming few months,” added Jeremy Leaf, north London estate agent and a former RICS residential chairman.
“Activity has proved particularly resilient as these numbers cover the period when election and economic uncertainty were dominant. Since then, demand has improved as the buying environment has stabilised and thankfully, listings are up too, resulting in more balance. Looking forward, only competitively priced properties will attract attention as mortgage costs remain relatively high for many.”
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