Individuals borrowed, on net, £2.8bn of mortgage debt in July, the highest since November 2022, and up from £2.6bn in June, the Bank of England has found.
Net mortgage approvals for house purchases increased to 62,000 in July, the highest since September 2022, and up from 60,600 in June.
In contrast, approvals for remortgaging fell to 25,100 in July, from 27,300 over the same period.
Meanwhile, net consumer credit borrowing rose to £1.2bn in July, from £0.9bn in June.
Reaction:
Ryan Davies, strategy director at Bluestone Mortgages:
“At a time when interest rates have finally fallen from their 16-year historic high and lenders are ramping up the competition to drop their rates, we expect to see demand continue into the latter half of this year.”
Jonathan Samuels, CEO of Octane Capital:
“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.”
Jason Ferrando, founder and CEO of easyMoney:
“We’ve already seen mortgage approval numbers stabilise so far in 2024, following the greater degree of market stability that has come from a hold on the base rate since September of last year.
“The number of buyers entering the market is now considerably higher than we saw this time last year and we expect market activity to increase further, driven by the recent base rate reduction and with hopes of another on the horizon – perhaps as soon as September.”
Charlotte Nixon, mortgage expert at Quilter:
“The latest data on UK mortgage borrowing and property transactions offers an interesting snapshot of the current state of the housing market, which looks to be in recovery mode after a turbulent few years.
“In July, net borrowing of mortgage debt increased to £2.8bn, marking the highest level since late 2022.
“This rise points to a resilient demand for property, even as the market faces broader economic uncertainties from high interest rates.
“It’s clear that many buyers are seizing opportunities, likely driven by a mix of stabilising market conditions and the anticipation of potential shifts in interest rates.
“The proliferation of 4% mortgage deals also helps boost demand.
“Mortgage approvals for house purchases also climbed to 62,000 in July, the highest figure since September 2022 reflecting a growing confidence among prospective buyers, suggesting that more people are willing to enter the market despite ongoing economic pressures.
“The provisional figures on UK residential transactions provide further context to these trends. The seasonally adjusted estimate shows a slight dip in residential transactions for the second consecutive month, down less than 1% from June.
“This modest decrease aligns with the typical mid-summer slowdown, as many take a break from house hunting during the holiday season.
“Interestingly, the non-seasonally adjusted data tells a different story, with residential transactions rising by 7% in July compared to the previous month.
“This increase suggests that, despite seasonal trends, the underlying demand for property remains robust.
“Additionally, non-residential transactions saw solid growth, with both seasonally and non-seasonally adjusted figures up in July, indicating a broader recovery in the property market.
“Overall, while the summer months have introduced some expected slowdowns, the market’s underlying strength is evident in the continued rise in mortgage borrowing and transaction volumes.
“As we look ahead, much will depend on how interest rates evolve and whether they will continue to support this cautious optimism.
“The ongoing demand for new mortgages and the increase in property transactions suggest that many people are seeing opportunity in the current market, positioning the housing sector for a potentially stronger finish to the year.”
Paul Matthews, senior director, risk at leading independent consultancy Broadstone:
“Confidence appears to be returning to the housing market with mortgage borrowing and net approvals for purchases both reaching their highest level in over 18 months.
“The data covers up to the end of July and we expect the reduction of the Bank of England’s Base Rate at the start of August to further stimulate demand in the market as we enter the busy Autumn period.
“However, we do not expect rates to significantly reduce – at least, to nowhere near levels seen before the hiking cycle – so lenders will still need to exercise caution around affordability as we have seen large increases in mortgage arrears recently.”
“The consumer credit market returned to growth in July which follows historical precedent amid increased spend through the summer holidays. Lenders should be cautious that borrowers aren’t overstretching themselves as we now begin the long run up to Christmas.
“However, given the increase consumer credit was driven by personal loans and auto finance rather than credit cards, it indicates that this uptick in borrowing is being driven by increased confidence in economic stability rather than ‘subsistence borrowing’ which typically manifests itself in credit card volumes.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Mortgage approvals for new purchases rose to their highest level since September 2022, which bodes well for the next few months for the housing market at least.
“At the same time, remortgage approvals fell, which may be down to borrowers sticking with their existing lender rather than going through the longer process of remortgaging to another provider.
“Those coming up to remortgage will find rates are more attractive than they were just a few weeks ago.
“The effective interest rate paid on new mortgages was broadly unchanged at 4.81% in July after months of increases.
“With a Bank of England base rate cut since then, as well as lenders reducing mortgage rates, we expect lower pricing to be reflected in next month’s data.
“With Lloyds Banking Group improving its offering for first-time buyers this week, we welcome innovation in the market from lenders to help boost transaction numbers.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“Mortgage approvals are always a good indicator of future market direction over the coming few months.
“Activity has proved particularly resilient as these numbers cover the period when election and economic uncertainty were dominant.
“Since then, demand has improved as the buying environment has stabilised and thankfully listings are up too, resulting in more balance.
“Looking forward, only competitively-priced properties will attract attention as mortgage costs remain relatively high for many.”
Nathan Emerson, CEO of Propertymark:
“It is extremely positive that consumers are continuing to approach the housing market with confidence and that current interest rates have not deterred people from making their next housing move.
“It’s important to stress that wider economic conditions are still on the pathway to full recovery, but we are certainly witnessing greater confidence when compared to twelve months ago.
“When conditions permit, it would be welcome news to see the Bank of England further lower interest rates, but it has to be appreciated that this must happen in a controlled manner so as not to undo the progress we have seen.”
