Net mortgage borrowing increased in August, rising to £6.1bn from £5.1bn in July, the latest Bank of England (BoE) figures show.

Data shows that net mortgage borrowing is still above the pre-pandemic average of £4.3bn in the year to February 2020. 

Gross lending showed little change last month at £25.4bn, down from £26bn in July. 

Mortgage approvals for house purchases increased sharply to 74,300 in August from 63,700 in July. 

This is the highest level since January this year when it reached 74,500, as well as a notable rise following a downward trend over the previous several months.

Remortgage approvals continued to increase in August to 49,400, up from 48,400 in July. This figure is close to the pre-pandemic average of 49,500 in the year to February 2020. 

MPowered Mortgages distribution director Emma Hollingworth says: “Despite the cost of living and mortgage rates rising, it is positive to see a slight increase in mortgage approvals. Whilst we know headwinds lie ahead, it is positive to see the Government announce plans to cut stamp duty with the aim of stimulating the housing market further.”

“However, with interest rates predicted to continue rising throughout the next six months, those looking for suitable and affordable mortgages will need a quick and certain answer to what mortgages are available to them.”

MT Finance director Tomer Aboody adds: “What looks like a final bid from buyers to take advantage of rates before increasing has increased the number of house purchases with mortgage approvals increasing.”

“Effective interest rates of around mid-2%, which in today’s environment seem like free money, show why buyers were keen to secure purchases.”