Figures from the Bank of England’s (BoE’s) Money and Credit statistics for the month showed this was also a 0.18 per cent increase on June’s average.
The average rate on outstanding mortgages rose by one basis point to 2.12 per cent.
Mark Harris, chief executive of SPF Private Clients, said although the speed of mortgage repricing seemed to have subsided, “it is no surprise that the number of borrowers remortgaging rose as homeowners try to secure a rate before they become even more expensive.”
He added: “Lenders have money to lend and remain keen to lend it although volume management is the name of the game. The market was a little quieter in July, a pattern since repeated in August, and it will be interesting to see how September turns out.
“Rising energy bills are impacting affordability calculations and lenders are broadening policy for higher income households accordingly. This could be via higher loan-to-income multiples and various income allowances or higher loan values.”
Mortgage approvals on the up
Despite rates rising to a six-year high, mortgage approvals both for house purchases and remortgages increased in July.
There were 63,770 approvals for purchases during the month, a nominal increase on June’s figure of 63,184. However, this remains below the pre-pandemic 12-month average of 66,800 approvals per month.
Some 48,447 remortgages were approved, which was up on the previous month’s total of 43,267 approvals. This was also down on the pre-pandemic average of 49,500.
Andrew Montlake, managing director of Coreco, said the uptick in remortgages was “no surprise” as it showed people were seeking to “reduce their single largest outgoing ahead of the storm”.
Ross Boyd, founder of Dashly.com added: “Remortgage activity is rampant right now. People see the direction rates are headed and are doing their best to mitigate the impact on their finances. In many cases, they’re paying the early redemption charge as they’re betting on rates rising significantly to combat spiralling inflation.
“Paying an early repayment charge now could save them lots over time.”
Mortgage lending rises
Gross mortgage lending increased to £26.1bn in July, up from £24.6bn in June, while gross repayments increased to £20.8bn, from £19.4bn.
Net borrowing of mortgage debt fell from £5.3bn to £5.1bn, but remained above the pre-pandemic average of £4.3bn.
A resilient market
Lisa Martin, development director at TMA Club, said: “Today’s figures reflect a resilient mortgage market. Despite recent interest rate hikes and the cost of living crisis influencing a more cautious approach by lenders, it is positive to see a slight increase in gross lending and mortgage approvals, resulting from a recent spike in remortgages.
“As prices are likely to continue to rise throughout the year, and with another potential rate rise on the horizon, customers will be looking to brokers to act swiftly to secure the best deals and lock into fixed rates before mortgages are replaced or pulled from the market.”
Emma Hollingworth, distribution director at MPowered Mortgages, added: “Those looking for a suitable and affordable mortgage product will need a quick and certain answer to what mortgages are available to them.
“It has never been more important that it is now to execute mortgages as quickly as possible, whilst also easing the pressure on homebuyers and remortgagers during what is a challenging time to purchase and remortgage a home.”
