Net borrowing of mortgage debt jumped to £7.7 billion in June, up from £3.3 billion in May, according to the Bank of England's money and credit report. The number of mortgage approvals for home purchases also rose to 58,200, compared with 56,600 in the previous month.
This increase came despite steadily rising mortgage rates, with the average two-year fixed residential mortgage at 5.62% and a five-year at 5.66% on Wednesday, according to Moneyfacts data.
Signs of stability
Experts suggested the modest rise could indicate some economic stability following recent Bank of England decisions to hold interest rates at 3.75%. Nathan Emerson, chief executive at Propertymark, said: “The increase in net mortgage approvals for house purchases in June suggests that buyers responded positively to a period of relative economic stability.”
“However, approvals remained below the average recorded over the previous six months, indicating that while confidence may be improving, activity has yet to fully recover.”
Consumer credit also rises
The data also showed net borrowing of consumer credit increased to £1.8 billion from £1.7 billion in May. Credit card lending was a key driver, rising to £0.9 billion in June from £0.6 billion in May. Other forms of consumer credit, such as car loans and personal loans, decreased.
Gareth Lewis, deputy chief executive of MT Finance, said: “There urgently needs to be some stimulus for the housing market, with the new Prime Minister required to do something to encourage transactions and activity, which will also benefit the wider economy.”
“Volatile funding rates are the real issue; while everything pointed towards a lower interest rate environment this year, the impact of war in the Middle East has since changed this outlook.”
