The latest figures from the Bank of England reveal that net mortgage approvals for house purchases saw an increase from 51,100 in May to 54,700 in June, while approvals for remortgaging rose from 34,100 to 39,100 during the same period.
Net borrowing of mortgage debt by individuals increased to £0.1bn in June, after net repayments of £0.1bn in May and record high net repayments of £1.1bn in April (if the period since the onset of the Covid-19 pandemic is excluded).
The ‘effective’ interest rate – the actual interest rate paid – on newly drawn mortgages continued to exhibit sustained increases, having risen by a further 7 basis points, to 4.63% in June.
Approvals for remortgaging (which only capture remortgaging with a different lender) saw a significant increase from 34,100 in May to 39,100 in June.
Commenting on the latest BoE figures, Bluestone Mortgages chief executive Steve Seal points out while it’s positive to see a slight uptick in the number of mortgage approvals, worse could be yet to come.
“We are still facing strong economic headwinds, and as lenders continue to increase rates and pull deals, affordability will remain a key challenge for would-be and existing borrowers”.
He adds: “While the outlook may appear to be gloomy, it is our industry’s duty to remind people that the homeownership dream can still live on.”
SPF Private Clients chief executive Mark Harris also points out that while mortgage approvals ticked up again in June to the highest level seen since October buyers remain concerned as to what’s going on in the wider economy and what they can afford.
“The average rate on new mortgages continued to rise in June, increasing by 7 basis points to 4.63 per cent. The worst of the pain may not be over with the Bank of England poised to raise the base rate again later this week”.
He adds: ‘Swap rates, which underpin the pricing of fixed-rate mortgages, and have been exceptionally volatile in recent weeks, have settled down since the encouraging dip in inflation. A number of lenders, including HSBC and Barclays, have reduced their fixed rates and borrowers will be hoping other lenders follow suit in coming days and weeks.’
Former Rics residential chairman Jeremy Leaf says: “Write the housing market off at your peril. Showing considerable resilience again, mortgage approvals are still on the up despite the inevitable time lag in these figures, reflecting activity a few months ago when the market was still recovering from post-mini-Budget blues.
He adds: “What we are finding on the ground is that since the succession of interest rate rises over the past few months, proceedable buyers are taking more time to weigh up the greater choice of available properties. They are also carrying out their own stress testing before taking advantage of their stronger position in the market.”
