Mortgage approvals for house purchase steady in June, says Bank of England

The number of mortgage approvals made to home buyers remained “broadly stable” in June, according to the Bank of England.

Some 59,976 mortgages for house purchase got the green light, compared with 60,134 in May.

The Bank of England’s Money and Credit report said: “Net mortgage approvals (that is, approvals net of cancellations) for house purchases, which is an indicator of future borrowing, remained broadly stable at 60,000 in June.”

The base rate has remained at 5.25% since August last year.

It's now very likely that we'll have a busier second half of the year

But with inflation hitting the 2% target level for the past two months, hopes have been raised that rates can start to be reduced, perhaps as early as Thursday, easing the pressure on borrowers.

Lucian Cook, head of residential research at estate agent Savills said: “June’s mortgage approvals provide further evidence that the general election had relatively little impact on home buyer sentiment, and that a pick-up in activity will depend more on what happens to Bank base rate in coming months. ”

Jason Tebb, president of website OnTheMarket said: “Stable mortgage approvals, which indicate the future direction of travel of the market, suggest that buyer and seller confidence remain consistent despite recent political changes.”

Nathan Emerson, chief executive of property professionals’ body Propertymark said: “Today’s figures show that the General Election did not damage people’s confidence in borrowing money to purchase their next home in the way many may have anticipated.”

Simon Gammon, managing partner, Knight Frank Finance, said: “Mortgage approvals continue to hover in the 60,000 range, down from about 66,000-a-month before the pandemic.

“Repeated false dawns in the battle against inflation have left the property market stuck in first gear, but it’s now very likely that we’ll have a busier second half of the year.

“The lenders have cut margins to the bone in the battle for market share, and this pattern should continue as the Bank of England offers some relief in the form of reductions to the base rate.

“The first Bank of England rate cut, whether it arrives on Thursday or perhaps in September, will provide a big boost to sentiment, which has improved for several months already.”

There were also signs of a dip in non-mortgage borrowing by households, as they shored up their savings.

The annual growth rate for consumer credit, which includes borrowing such as credit cards, personal loans and overdrafts, was 8.0% in June, slowing from 8.4% in May.

The annual growth rate for credit card borrowing fell to 10.5% in June, from 10.8% in May.

Household deposits with banks and building societies rose by £8.4 billion in June.

This was driven by households depositing an additional £3.4 billion into Isas , the report said.

Private non-financial corporations (PNFCs) raised, on net, £6.7 billion of finance in June, an increase from £4.2 billion in May.

Borrowers may well be awaiting movement on the Bank of England’s base rate before deciding to take out more credit

Karim Haji, global and UK head of financial services at KPMG said: “The slight dip in consumer borrowing in June reflects the fact that the more positive economic outlook – with growth forecasts being revised upwards – is yet to be felt by consumers.

“Despite these positive economic indicators, it remains to be seen whether a turnaround will be sustained or if challenges are on the horizon.

“What is clear is that despite two straight months of inflation remaining on-target, households aren’t necessarily feeling better off for it – indeed, wage growth has slowed in recent months, which may go some way to explaining this.

“Borrowers may well be awaiting movement on the Bank of England’s base rate before deciding to take out more credit although the recent fall in mortgage rates may lead to increasing confidence and appetite.

“Similarly, these latest figures were taken whilst we were in the thick of the General Election campaign, with many borrowers perhaps waiting until a clearer sense of the incoming Government’s fiscal policy emerged.”

Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the online investment platform said of savings rates: “Hunting out the best deal while you can is vital.”