Mortgage approvals for house purchases increased to 58,200 in June from 56,600 in May, but remained below the six-month average of around 61,400, according to Bank of England data. Remortgaging approvals also rose slightly to 34,200 from 33,800.
Net borrowing of mortgage debt jumped to £7.7 billion in June, up from £3.3 billion in May, above the recent average of £4.9 billion. The effective interest rate on newly drawn mortgages rose to 4.35% in June from 4.22% in May, while the rate on outstanding stock increased to 3.96% from 3.92%.
Experts warn borrowers to act quickly
Shaun Sturgess, director of Sturgess Mortgage Solutions, said demand recovered in June from uncertainty caused by the Middle East conflict, but renewed tensions have pushed rates up again in recent weeks. He added: 'This once again shows the need for borrowers to lock into rates at their earliest convenience just in case the market suddenly moves against them, as it has in July. Locking in protects you against rate rises and a good broker will switch you onto a lower rate if one becomes available.'
Jamie Elvin, director of Strive Mortgages, said the data suggests mortgage demand 'remains surprisingly resilient despite higher borrowing costs'. He noted purchase approvals rebounded and remortgaging strengthened, but approvals remain below the six-month average and effective rates are edging higher. 'Unless borrowing costs fall more decisively, expect steady rather than booming mortgage activity,' he said.
Market resilience and affordability pressures
Tracey Dixon, owner of Pure Mortgage and Protection, said demand is holding up 'remarkably well despite ongoing affordability pressures'. She added: 'Buyers aren’t waiting for perfect conditions anymore – they’re adapting to the market that’s in front of them. ... If a mortgage is affordable today and suits a person's long-term plans, waiting indefinitely for the ‘perfect’ rate can end up costing more than getting on with life.'
Emma Jones, managing director of Whenthebanksaysno.co.uk, noted that rising oil prices last week led lenders like Santander and Halifax to increase rates this week. She said: 'Amid ongoing tensions in the Middle East, the price of oil has been on the rise again and that risks feeding inflation, which could see interest rates rise or at least stay higher for longer. ... Tomorrow's Bank of England interest rate decision will be closely monitored.'
Samuel Mather-Holgate, managing director of Mather and Murray Financial, described the figures as 'less like a housing market recovery and more like a patient whose condition has stopped deteriorating'. He said approvals ticked higher but remain below average, and with newly drawn rates at 4.35%, affordability is 'still doing a lot of damage'. 'For now, demand is resilient, but fragile,' he added.
