Approvals for remortgages increased, however – by 400 from May to 34,200 in June.
Nathan Emerson, CEO of Propertymark, commented: “The increase in net mortgage approvals for house purchases increased 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.
“A consistent Bank of England base rate, competitive mortgage products, easing inflation and a temporary reduction in geopolitical tensions are all likely to have supported buyer confidence during the month.”
Gross lending edges higher as net borrowing jumps
Secured gross lending increased slightly to £27.4bn in June, up from £27.2bn in May – above the six-month average of £26bn.
Grasping the next buy to let opportunities
Sponsored by Aldermore
Repayments decreased in June to £21.3bn, from £22.7bn, but remained above the six-month average of £20.4bn.
Net borrowing of mortgage debt by individuals increased to £7.7bn in June from £3.3bn in May – above the previous six-month average of £4.9bn. The annual growth rate for net mortgage lending increased slightly to 3.6% in June from 3.5% in May.
Borrowers urged to act as mortgage rates rise
The average interest rate on newly drawn mortgages increased to 4.35% in June from 4.22% in May. The rate on the outstanding stock of mortgages was 3.96% in June, up from 3.92% in May.
Mark Harris, chief executive of mortgage broker SPF Private Clients, advised borrowers to secure rates sooner rather than later.
He said: “The effective interest rate paid on new mortgages jumped again to 4.35%, while the rate on the outstanding stock of mortgages rose to 3.96%. On the ground, mortgage rates have risen back to the same level seen a month ago amid renewed tensions in the Middle East. Borrowers who will need a mortgage in coming months may want to consider securing a product sooner rather than later in case rates rise further in the short term.”
Housing high on PM’s agenda
Jason Tebb, president of OnTheMarket, said the rise in house purchase approvals in June was a positive sign, although approvals remained below the six-month average, reflecting the continued impact of political and economic uncertainty on buyer and seller confidence.
Tebb said the appointment of Andy Burnham as Prime Minister puts housing “near the top of the agenda rather than at the bottom”, but added that the real challenge will be turning ambition into action.
“Whether that turns into homes built and problems solved, or just another bold set of promises, is the question that will define his time at Number 10,” he said.
Gareth Lewis, deputy CEO of specialist lender MT Finance, echoed calls for government action, arguing that measures are needed to stimulate housing market activity and support the wider economy.
He 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.”
However, he warned that funding costs remain a concern, adding: “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.”
