The Bank of England (BoE) Money and Credit data for June showed the number of approvals for house purchases rose by 900 from the previous month to 64,200.
Approvals for remortgaging increased by 200 to 41,800, reaching the highest level of approvals for remortgage since October 2022, when this totalled 50,000.
Tomer Aboody, director of MT Finance, said: “With rising borrowing numbers when it comes to mortgage approvals and debt, we are seeing how lower mortgage rates are helping fuel confidence in borrowers looking to take a step onto, or move up, the ladder.
“Another rate cut this year would encourage further activity. Although transaction numbers are increasing, they’re still lower than previous years, which is, of course, much to do with higher stamp duty and taxes imposed by the Chancellor in her last Budget.
“Encouragement is needed to boost activity and fuel the economy, which can either come via a restructure of stamp duty and/or restructure of taxes.”
Are your clients ready for the first Making Tax Digital reporting deadline?
Sponsored by BM Solutions
Mark Harris, chief executive of SPF Private Clients, said the higher number of remortgages showed “borrowers are keen to shop around for better deals, even if it means the hassle of applying to another lender”.
Gross mortgage lending rises
Some £23.9bn of gross mortgage lending was completed in June, higher than £20.6bn in May. Gross repayments also rose, from £17.6bn to £18.8bn.
The value of net borrowing of mortgage debt increased by £3.1bn to £5.3bn in June, compared to a £2.8bn rise in May, coming to £2.2bn.
The annual growth rate for net mortgage lending also increased from 2.6% to 2.8%.
Lower rates for new mortgages, higher rates for outstanding loans
The interest rate on newly drawn mortgages in June fell for the fourth month in a row, from 4.47% in May to 4.34% in June.
By contrast, the average interest rate on the outstanding stock of mortgages rose marginally by one basis point to 3.88%.
Affordability remains an issue
Jason Tebb, president of OnTheMarket, said there were signs that affordability continued to ease, and said four base rate reductions in the past year had helped, as well as relaxed lending rules and criteria allowing people to borrow larger mortgages.
Tebb added: “With buyers having to fund higher stamp duty costs since the end of the concession, further rate reductions would provide welcome impetus for the market as we head into the autumn.”
Emma Cox, managing director of real estate at Shawbrook, said the rise in approvals was positive.
She added: “However, affordability continues to be a pressing issue – especially in populated cities where high property values are pricing many prospective buyers out of deals. While there are moves to make homeownership more achievable, it still remains unattainable for many, and heavy demand is being placed on the rental sector as a result.
“This presents opportunities for professional landlords who are looking to capitalise on demand and expand their portfolios. The rental sector is still crying out for quality properties, and private landlords have a key role to play in catering for the market. The recent promises to slash red tape and accelerate housebuilding should provide added confidence for the months ahead.”
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said not everyone “can enjoy better borrowing conditions”, adding: “Existing homeowners emerging from cheap fixed rate deals secured when interest rates were at rock bottom, are likely to be bracing for higher repayment costs when they eventually refinance, unless they have managed to clear a chunk of the outstanding balance.”
She said this was evident in the rising average rate for the outstanding stock of mortgages.
Haine said: “Cost concerns are likely to be driving the increase in the number of remortgage approvals, as homeowners shop around for lower-cost home loans when their existing deals expire.”
