"Although we have seen a real uplift across the sector since the start of the year, recovery can come with ups and downs along the way."
- Nathan Emerson, CEO of Propertymark
Net mortgage approvals for house purchases totalled 60,000 in May, down from 60,800 in April, according to the latest Money and Credit statistics from the Bank of England.
Approvals for remortgaging with a different lender also saw a slight decrease, from 29,900 in April to 29,600 in May.
The data shows that individuals borrowed, on net, £1.2 billion of mortgage debt in May, down from £2.2 billion in April.
The annual growth rate for net mortgage lending rose to 0.3% in May, after a rise to 0.2% in April (the first rise in the growth rate since October 2022).
Gross lending increased for the fourth consecutive month to £22.2 billion in May, up from £21.1 billion in April, while gross repayments saw an increase of £1.2 billion over the same period to £20.5 billion.
Nathan Emerson, CEO of Propertymark, commented: “Although we have seen a real uplift across the sector since the start of the year, recovery can come with ups and downs along the way. With the general election now only days away, we are keen to see more detailed plans and timeframes from any incoming government regarding support for buyers across the coming weeks. Propertymark also remains hopeful once conditions are right, we will witness a reduction in the base rate too.”
Aaron Milburn, UK managing director at Pepper Advantage, said: “The modest drop in mortgage approvals demonstrates the complexity of the market environment despite inflation appearing to stabilise. We are still in the transition from a low to high-rate environment and the consequences for borrowers are still emerging. Even if interest rates are cut during the summer, there will be a significant lag before households feel the benefits and, even for those who move onto slightly lower rates, the impact on monthly repayments is likely to be modest.
“We are in a better place now than we were a year ago, yet, as the Bank of England has warned, increased mortgage costs have yet to be felt by millions of homeowners. We are not out of the woods yet – the mortgage industry will be watching mortgage approvals, arrears and other data points closely to ensure that households are supported over the long term. Meanwhile, regardless of the results of the general election, mortgage pressure is set to remain a critical issue for the next government.”
Joe Pepper, UK CEO at PEXA, added: “Uncertainty still seems to have a firm grip over UK lenders. Despite inflation hitting the 2% target, the Bank of England made the decision to hold the interest rate. As such, there is a lack of borrower confidence resulting in a stagnation of mortgage activity and a drop in lending and approvals.
“We expect this trend to continue in June as borrowers and lenders alike wait to see the outcome of the General Election. The housing market has been a key battle ground during the campaign trail with parties promising millions of new homes to earn the support of younger voters and stir economic activity. However, the result of this will clearly not be felt until after the result is called and policies come to fruition - borrowers are naturally waiting to see what will happen before committing to mortgage terms.
“While understandable, this is leading to the build-up of demand. As soon as borrowers see rates fall, they will act and, as promising as this is, it will mean nothing if we do not have adequate infrastructure in place to handle the increased activity an improved economy and borrowing rates will bring. Any incoming government must support the digitisation of the remortgage process to support conveyancers and speed up transaction times, otherwise any policy to stimulate the front end of the process will be like trying to put your foot on the accelerator with the handbrake still on.”
