UK lenders approved a higher number of mortgages than anticipated in June, signalling a renewed sense of activity in the property market. New data from the Bank of England has shown that borrowing for home purchases and remortgaging has gained fresh momentum.
The number of net mortgage approvals rose slightly in June, reaching 64,167 – an increase of around 900 compared to the previous month. While the rise may seem modest, it is notable in the context of ongoing economic uncertainty and recent pressures on household finances.
One of the standout trends from the data is the significant rise in remortgaging activity. Approvals for remortgages involving a switch to a new lender climbed by 200 to a total of 41,800 – the highest monthly figure recorded since October 2022, when 50,000 such approvals took place.
This uptick suggests that many homeowners are taking advantage of improved mortgage deals or are simply seeking to better manage their repayments amid changing financial circumstances. The increased activity is also a sign of growing confidence among consumers and lenders alike.
Experts say the recent momentum in mortgage activity can be partly attributed to the housing market recovering after the end of pandemic-related tax incentives for buyers. These incentives, which had fuelled a mini-boom in property transactions, were phased out earlier, but the market appears to be regaining its footing.
Nathan Emerson, Chief Executive of Propertymark, welcomed the news, describing the figures as “encouraging” during a time of broader economic challenges. He noted that speculation over possible tax increases and inflationary pressures hasn’t derailed buyer interest.
Emerson also pointed to the Chancellor’s recent “Leeds Reforms” as a key factor in boosting lender sentiment. These reforms were seen as supportive of the mortgage market, particularly by encouraging the development of mortgage products targeted at low-income earners.
In June, net borrowing of mortgage debt saw a notable increase. Borrowing rose by £3.1 billion to £5.3 billion compared to the previous month’s figure of £2.2 billion. This indicates that more people are not only applying for mortgages but also securing larger amounts.
Gross mortgage lending reached £23.9 billion in June, a jump from £20.6 billion in May. At the same time, repayments also increased, from £17.6 billion in May to £18.8 billion in June, showing that the market is experiencing strong activity on both ends.
The average interest rate on new mortgage deals continued to fall, reaching 4.34% in June. This marks the fourth month in a row of declining rates, providing some relief for borrowers facing ongoing cost-of-living pressures.
Conversely, the interest rate on outstanding mortgage balances edged up slightly to 3.88% in June, from 3.87% the previous month. While the rise is minor, it’s a reminder that not all borrowers benefit equally from market changes, especially those on fixed-rate deals.
Jason Tebb, president of property portal OnTheMarket, observed that affordability appears to be improving. He attributed this to a combination of falling base rates, less rigid lending criteria, and a more competitive mortgage environment.
Tebb also noted that the end of stamp duty discounts has increased costs for buyers, but further reductions in interest rates could offset some of that burden. With autumn approaching, he believes continued rate cuts may give the market another push.
The Bank of England held interest rates at 4.25% in June, though it is widely expected to announce a cut to 4% in its upcoming meeting on 7 August. Such a move would offer more breathing room for homeowners and prospective buyers alike.
Matt Swannell, Chief Economic Advisor to the EY ITEM Club, offered a more cautious take. He said that while the market is stabilising, mortgage affordability remains stretched, and any recovery in prices or activity may be slow and steady rather than dramatic.
Finally, consumer borrowing beyond mortgages also saw a rise. Annual growth in consumer credit hit 6.7% in June, up from 6.5% in May. Credit card debt alone grew by 9.7%, suggesting that while some households are saving, others are relying more heavily on borrowing to cover rising living costs.
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