Bank of England figures reveal net borrowing of mortgage debt by individuals increased to £7.7 billion in June, from £3.3 billion in May, above the previous six month average of £4.9 billion.
Net mortgage approvals for house purchases increased to 58,200 in June, from 56,000 in May – below an average of around 61,400 over the previous six months.
The sharp rise in net mortgage borrowing suggests purchase activity accelerated as buyers completed transactions agreed earlier in the year, rather than a dramatic improvement in underlying housing demand, according to Richard Pinch, senior director at independent banking and credit advisory consultancy Broadstone.
He explained: “Mortgage approvals remain below their recent average, indicating that activity is still being constrained by affordability pressures and uncertainty over the outlook for interest rates.”
Melanie Spencer, growth director at Target Group, disagrees. “An increase in both net mortgage borrowing and approvals shows there is still underlying demand in this market, despite a very challenging backdrop”, she said.
“While we know that lenders have increased pricing in recent weeks due to the rise in swap rates, there is equally potential buyers out there that have had enough of the crisis fatigue and want to kick on with plans. With no signs of an end to this conflict, lenders will continue to face a tug of war between prudent pricing and the need to meet their own lending targets and ambitions for market share.”
Nathan Emerson, CEO at Propertymark, said: “The increase in net mortgage approvals for house purchases increased June suggests that buyers responded positively to a period of relative economic stability.
“However, approvals remained below the average recorded over the previous six months, indicating that while confidence may be improving, activity has yet to fully recover.
“A consistent Bank of England base rate, competitive mortgage products, easing inflation and a temporary reduction in geopolitical tensions are all likely to have supported buyer confidence during the month.”
