"The interest rate cut at the start of this month with the prospect of more rate cuts to come looks set to boost the mortgage market revival "
- Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners
Net mortgage approvals increased to 62,000 in July, the highest since September 2022 (65,100), and up from 60,600 in June, according to the latest Money and Credit statistics from the Bank of England.
Following revised figures from the Bank of England for June, this marks two consecutive months of positive growth in mortgage approval levels with the monthly figure having increased since May.
Approvals remain considerably higher (+26.5%) than the 49,015 seen in July 2023.
Net borrowing of mortgage debt by individuals increased to £2.8 billion in July, the highest since November 2022 (£3.3 billion), and up from £2.6 billion in June.
The annual growth rate for net mortgage lending rose to 0.6% in July, following a rise to 0.5% in June, continuing the trend seen in previous months.
Approvals for remortgaging with a different lender fell to 25,100 in July, from 27,300 in June, continuing the downwards trend seen since March 2024.
Gross lending also decreased to £19.6 billion in July, from £20.5 billion in June, while gross repayments decreased by £0.9 billion over the same period, to £17.4 billion.
The ‘effective’ interest rate on newly drawn mortgages was broadly unchanged at 4.81% in July, ahead of the cut to Bank Rate on the 1st of August.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, commented: “UK net mortgage approvals – an indicator of future borrowing – increased to 62,000 in July – the highest level since September 2022 - as hopes of a summer interest rate cut ramped up, spurring more buyers, particularly those waiting in the wings for better borrowing conditions, to dive into the market. Net mortgage lending also accelerated in July – hitting the highest level since November 2022 as momentum returned to the market.
“Improving mortgage rates and robust wage growth have eased the affordability challenge for some buyers in recent months, though borrowing costs remain relatively high when compared to the lengthy era of cheap money in the run-up to the pandemic. The interest rate cut at the start of this month with the prospect of more rate cuts to come looks set to boost the mortgage market revival as buyers and sellers look to take advantage of improving borrowing conditions. One portal has reported new listings hitting a seven year high this month."
CEO of Octane Capital, Jonathan Samuels, added: “Revised figures show that we’ve now seen two consecutive months of positive growth where mortgage approvals are concerned and this is in addition to the fact that monthly mortgage approvals have remained above the 60,000 threshold since February of this year.
"This suggests a property market that is very much on the up and we expect this outlook to only improve further following the Bank of England’s decision to cut interest rates for the first time in four years.
"Whilst the reduction itself may have been marginal at 0.25%, it’s likely to act as a floodgate moment for the housing market, with more buyers looking to make their move as the monthly cost of a mortgage continues to ease.”
