Net mortgage approvals increased by 800 to 65,400 in July, according to the latest Money and Credit statistics from the Bank of England.
This comes as the average interest rate paid on newly drawn mortgages decreased for the fifth consecutive month, to 4.28% in July from 4.34% in June.
However, approvals for remortgaging with a different lender decreased by 2,700, to 38,900, as the rate on the outstanding stock of mortgages remained at 3.88%.
Net borrowing of mortgage debt decreased by £0.9 billion to £4.5 billion in July, compared to a £3.2 billion increase of net borrowing to £5.4 billion in June.
The annual growth rate for net mortgage lending slightly rose from 2.8% to 2.9% in July. Gross lending increased to £24.3 billion in July, from £24.0 billion in June, while gross repayments also rose in July, to £19.7 billion, from £19.2 billion in June.
Nathan Emerson, CEO of Propertymark, commented: “Considering the many twists and turns within the wider economy currently, it’s extremely positive to see a further uplift in mortgage approvals. The resilience of the housing market is often a direct indicator of consumer confidence and affordability, and it has been reassuring to see forward momentum as the year has progressed.
“Hopefully, now that the Bank of England has taken the call to cut the base rate by a further quarter per cent, we should see lenders bringing additional levels of competition to the marketplace. Those already on fixed-term mortgage products should already be feeling the combined benefit of three base rate cuts across the year.”
Richard Pike, chief sales and marketing officer at Phoebus Software, said: “Today’s Money and Credit figures show a mixed picture for the mortgage market. While net mortgage borrowing fell back in July after a strong June, approvals for house purchases edged higher, suggesting that underlying demand remains resilient despite affordability pressures. The drop in remortgage approvals highlights that many borrowers are still holding off making decisions in the hope of securing a better deal as rates settle. With the Bank of England’s recent base rate cut yet to fully feed through, the coming months will be crucial in determining whether activity levels continue to build momentum.”
Stephanie Daley, director of partnerships at Alexander Hall, added: “Another monthly increase in mortgage approvals, and the third in a row, provides further evidence that momentum in the market is continuing to build. Crucially, approvals have remained above the 60,000 mark since March of last year, which underlines the resilience of buyer demand even against a challenging backdrop.
"A number of recent policy changes are already helping to sustain this momentum. The decision to make the Mortgage Guarantee Scheme permanent has given lenders additional confidence to back buyers with smaller deposits, while adjustments to loan-to-income caps have provided more flexibility across the lending landscape.
"Looking ahead with affordability steadily improving, we expect to see activity continue to gather pace over the remainder of the year.”
