Net mortgage borrowing more than doubled to £2.7 billion during June from £1.3 billion the month before, the latest Bank of England data reveals, marking the second consecutive monthly rise as lower mortgage rates fuel buyer confidence and market activity.
The annual growth rate for net mortgage lending rose to 0.5% in June from 0.3% in May, the second rise in a row.
Net mortgage approvals for house purchases were at 60,000 last month, maintaining levels that industry figures say reflect an unusually strong summer market driven by recent changes to mortgage lending rules that allow buyers to borrow up to 20% more than three months ago.
The news has been welcomed by the property industry as a positive sign for the future direction of the housing market.
Mortgage approvals are always a better indicator than house prices as to market activity over the next few months.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Mortgage approvals are always a better indicator than house prices as to market activity over the next few months at least – and these are no exception.
“On the ground, we are seeing the relaxation of borrowing rules helping to support resilience among buyers and sellers, which more competitive mortgage rates are contributing to.
“However, given the oversupply of stock, much of which is priced too high for buyers nervous about the economic outlook, vendors need to be competitive if they wish to attract attention.”
Nathan Emerson, CEO of Propertymark, says: “This is a positive sign at a time when there is a poor economic outlook in general and potential tax rises on the way.
“The Chancellor’s recent Leeds Reforms sent a positive signal to the mortgage market, which should encourage many lenders to focus new products and services towards those on lower incomes to help them take their first step onto the housing ladder.”
Data shows unusually high levels of housing market activity for the early summer.”
Richard Donnell, Executive Director at Zoopla, says: “Demand for mortgages to buy homes increased in June as stable mortgage rates and changes to mortgage affordability have encouraged more buyers to agree home purchases.
“Zoopla data shows unusually high levels of housing market activity for the early summer, with sales agreed up 8% on last year and 11% more buyers in the market. While activity levels are higher, this isn’t feeding into house price inflation, which is slowing. We expect increased housing activity to support demand for mortgages in the rest of the year.”
The market appears to be back on track.”
Jason Tebb, President of OnTheMarket, says: “The market appears to be back on track with approvals for house purchases, an indicator of future borrowing, increasing again in June as confidence remains remarkably steady.
“With the rate on newly-drawn mortgages falling again for the fourth consecutive month, while the rate on outstanding mortgage stock increased slightly, overall, there are signs that affordability continues to ease.
“Four base rate reductions from the Bank of England in the past year have helped, along with recently relaxed lending rules and easing of criteria, enabling borrowers to take on bigger mortgages.
“With buyers having to fund higher Stamp Duty costs since the end of the concession, further rate reductions would provide welcome impetus for the market as we head into the autumn.”
Another rate cut this year would encourage further activity.”
Tomer Aboody, director of specialist lender MT Finance, says: “With rising borrowing numbers when it comes to mortgage approvals and debt, we are seeing how lower mortgage rates are helping fuel confidence in borrowers looking to take a step onto, or move up, the ladder.
“Another rate cut this year would encourage further activity. Although transaction numbers are increasing, they’re still lower than previous years, which is, of course, much to do with higher stamp duty and taxes imposed by the Chancellor in her last budget.”