UK mortgage approvals hold firm as markets await interest rate cut

The number of mortgage approvals by lenders held steady last month in a sign the UK’s housing market is stabilising after being hit by high interest rates.

There were 60,000 new mortgages approved in June, a slight decrease from the 60,100 recorded in May, according to the Bank of England.

Borrowers took on £2.7bn of mortgage debt during the month, marking an increase from £1.3bn in May.

The Bank of England’s money and credit data showed there were 59,976 mortgages approved, compared with 60,134 in May. The report said: “Net mortgage approvals (that is, approvals net of cancellations) for house purchases, which is an indicator of future borrowing, remained broadly stable at 60,000 in June.”

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Despite the base rate holding at 5.25% since August last year, the recent trend of inflation hitting the 2% target level for the past two months has fuelled optimism that interest rates might soon be reduced, potentially easing the financial burden on borrowers.

Nathan Emerson, chief executive of estate agent body Propertymark, said: "Today’s figures show that the general election did not damage people’s confidence in borrowing money to purchase their next home in the way many may have anticipated. Momentum has sustained itself, and now with a newly elected government ambitious about building new homes, we hope that confidence increases further in the housing market."

However, approvals for remortgaging with a different lender decreased to 27,500 in June, from 29,300 in May.

Lucian Cook, head of residential research at estate agent Savills, said: “June’s mortgage approvals provide further evidence that the general election had relatively little impact on home buyer sentiment, and that a pick-up in activity will depend more on what happens to the Bank base rate in coming months.”

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Simon Gammon, managing partner at Knight Frank Finance, said: “Mortgage approvals continue to hover in the 60,000 range, down from about 66,000-a-month before the pandemic.

"Repeated false dawns in the battle against inflation have left the property market stuck in first gear, but it’s now very likely that we’ll have a busier second half of the year. Lenders have cut margins to the bone in the battle for market share, and this pattern should continue as the Bank of England offers some relief in the form of reductions to the base rate.”

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