Mortgage lending proved surprisingly resilient last month with the number of home loan approvals rising from 51,100 to 54,700 despite sharply higher interest rates.
The latest data from the Bank of England will boost hopes that the housing market can avoid a major slump despite yet another almost certain further hike in borrowing costs this week. However, approvals still remain well below the pre-pandemic average of 66,000.
The Bank’s Monetary Policy Committee is expected to order a further quarter-point rise in rates to 5.25% on Thursday, although a half-point is still seen as possible
It will be the 14th rise on the trot since the Bank began hiking rates in December 2001. Interest rates on newly drawn mortgages rose seven basis points in June to 4.63%, from 4.56% in May, as lenders repriced their product ranges after worse than expected inflation data in May.
But the average rate on the entire stock of outstanding mortgages is still below 3%, rising 10 basis points to 2.92%. Net borrowing of consumer credit — through credit cards, personal loans and car loans — rose to £1.7 billion, the highest level since April 2018.
North London estate agent Jeremy Leaf, said: “Write the housing market off at your peril. Showing considerable resilience again, mortgage approvals are still on the up despite the inevitable time lag in these figures, reflecting activity a few months ago when the market was still recovering from postmini-Budget blues.”
Simon Jones, CEO of investing comparison platform, InvestingReviews. co.uk, said: “Though the cost of new mortgages rose again in June, the number of mortgages agreed for house purchase also edged up. The property market is far from buoyant, with mortgage approvals below the monthly average in 2022, but June’s marginal uptick on May shows that people have recalibrated to the new rate environment and are getting on with their lives
“Worryingly, however, this data shows the growing reliance on credit as people’s finances are stretched to breaking point.”
