The British mortgage market showed some signs of stabilising in June as the number of mortgage approvals rose to its highest since September, according to data published today.
British banks approved lending for 40,541 house purchases during the month, above expectations of around 39,100, the latest seasonally adjusted figures from industry body UK Finance show.
The value of approved loans for house purchases rose to above £8bn for the first time since February.
However, the figures continue to show weakness in demand for borrowing, with the number of approvals still 2.1 per cent lower than June last year. Economists and industry figures have warned that the outlook for the housing market is clouded by political uncertainty as the UK leaves the EU, while an imminent interest rate rise will test Britons’ appetite for more expensive debt for only the second time in a decade.
Lenders have been sustained in part by a strong demand for remortgaging, as borrowers rush to lock in low rates before the Bank of England raises the cost of borrowing further. The Bank is widely expected to increase bank rate, at which it lends to banks, by 0.25 percentage points next week.
The 3.4 per cent year-on-year increase in remortgaging has made up for a 4.7 per cent reduction in house purchase lending in June compared to the same month last year. Mortgage approvals for remortgaging fell slightly in June compared to May, although at 29,354 remained the second strongest performance since September.
Across the entire mortgage market gross lending has risen 2.1 per cent year-on-year to £23.5bn, driven by specialist lenders. High street bank mortgage lending has fallen by 2.9 per cent during the same period.
Source: City A.M.