Mortgage borrowing increased by £3.1bn in June

Latest Bank of England data has shown that net borrowing of mortgage debt by individuals increased by £3.1 billion to £5.3 billion in June, compared to a £2.8 billion increase to £2.2 billion of net borrowing in May.

The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages decreased for the fourth consecutive month, to 4.34% in June from 4.47% in May. 

Net mortgage approvals for house purchases increased by 900, to 64,200 in June. Approvals for remortgaging also increased by 200, to 41,800 in June. This marked the highest number of approvals for remortgaging since October 2022 (50,000).

 Richard Pinch, Senior Director of Risk, Broadstone said “Mortgage borrowing doubled in June thanks to rates continuing to edge down and as buyers reached the end of the typically busy Spring period.

“Despite ongoing market uncertainty, the direction of travel for mortgage rates appears to be downward at least in the short-term which should support sentiment when we reach the Autumn.

“Meanwhile, the ongoing efforts of the FCA to ease regulation in the mortgage market to support home ownership should also drive increased lending once those reforms begin to take effect.”

John Phillips, CEO of Just Mortgages and Spicerhaart, said “It’s positive to see another monthly increase in mortgage approvals, even if it’s only marginal. While the summer period may slow things slightly, it’s encouraging to see some momentum building in the mortgage market, with prospective buyers and movers buoyed by ever-growing innovation among lenders and an increasing spotlight on improving affordability and access to new mortgages. Although the jury may still be out on its decision, all eyes will be on the MPC meeting next month and whether we see another cut to the base rate.

“Remortgage activity now at its highest level since 2022 certainly reflects what our brokers are seeing on the ground. We knew 2025 would be a busy year for mortgage maturity, whether it’s those facing a rate shock from covid-era deals ending, or rate relief from deals chosen in the wake of the mini-budget. It’s a reminder to all brokers of the leg work required to get back in touch with clients and encourage them to explore their options in good time – especially in market that has seen so much change since those deals were first taken.”