The Bank of England’s latest Money and Credit figures show that net mortgage approvals rose slightly in July, despite overall mortgage borrowing easing during the month.
Net mortgage borrowing by individuals fell from £5.4bn in June to £4.5bn in July. Gross lending rose to £24.3bn, compared with £24bn in June, while gross repayments increased to £19.7bn. Approvals for house purchases ticked up by 800 to 65,400, though remortgage approvals slipped by 2,700 to 38,900.
The effective interest rate on newly drawn mortgages fell for the fifth consecutive month to 4.28%, down from 4.34% in June. The rate on the stock of outstanding mortgages held steady at 3.88%.
CONSUMER CREDIT DATA
Consumer credit continued to grow, with net borrowing rising from £1.5bn in June to £1.6bn in July. Within this, credit card lending rose by £0.1bn to £0.8bn and other forms of consumer credit, such as car finance and personal loans, climbed to £0.9bn from £0.7bn. The annual growth rate for consumer credit increased to 7.0%, while credit card borrowing rose at an annual rate of 10.1%.
Households increased deposits by £7.3bn in July, compared with £8bn in June, with sight deposits and ISAs seeing the strongest growth.
Ben Allkins, head of mortgages and protection at Just Mortgages, said: “While net borrowing slowed in July, it’s encouraging to see another monthly increase in mortgage approvals, albeit only marginal again.
“There’s no question that July marked the usual start of a quieter summer season, although positive movement from lenders in anticipation of the August base rate cut certainly gave brokers a great headline to proactively share with clients and encourage activity.”
Tomer Aboody, director at MT Finance, warned that ongoing uncertainty over government policy was likely to leave buyers and sellers in wait-and-see mode, while Mark Harris, chief executive of SPF Private Clients, pointed to a resilient housing market but noted that affordability remains tight.
He said “Remortgaging numbers dropped, suggesting that borrowers may be sticking with their existing lender and refinancing rather than going through the hassle of another mortgage application with a new lender.”
Simon Wright, chief operating officer at PEXA, added: “Easing interest rates and a spate of new products from lenders, from family-backed mortgages to 0% deposits, will likely have increased approvals. This undoubtedly will be strongly welcomed by an industry that has hoped for a more favourable outlook for years and has been put at the heart of the economy.”
He cautioned, however, that the rise in demand could place “unprecedented strain on conveyancers” unless the transaction process is reformed and technology is more widely adopted to speed up completions.
