New data from the Bank of England has revealed that net mortgage approvals for house purchases saw an increase from 51,100 in May to 54,700 in June, while approvals for remortgaging rose from 34,100 to 39,100 during the same period.
This follows the data released in June which revealed the decrease in mortgage approvals for April of this year having risen the prior month.
Net borrowing of mortgage debt by individuals increased to £0.1 billion in June, after net repayments of £0.1 billion in May and record high net repayments of £1.1 billion in April (if the period since the onset of the Covid-19 pandemic is excluded).
The “effective” interest rate – the actual interest rate paid – on newly drawn mortgages continued to exhibit sustained increases, having risen by a further 7 basis points, to 4.63% in June.
Gross lending increased for the second consecutive month, from £19.0 billion in May to £20.0 billion in June. Similarly, gross repayments rose from £19.0 billion in May to £19.8 billion in June.
Adam Oldfield, chief revenue officer at Phoebus Software, said:
“The figures from the Bank of England this morning tell two distinct stories. One that shows that no matter what the naysayers believe there is still an appetite to purchase property. The other story is perhaps what we have been expecting to see, that consumers are starting to rely more on credit as the rising cost of living bites. “
On this Consumer Duty Day, when all financial services come under the spotlight, this level of consumer borrowing is the biggest indication to date that consumers are looking to spread the cost of their spending. It is an opportunity for everyone in our industry to show that everything we do is with our clients’ very best interests at heart. For lenders especially, this is a time to ensure that all the right systems and people are in place to ensure Consumer Duty is at the forefront of everything they do going forward.”
