Mortgage approvals increase in July

Latest Bank of England data showed mortgage approvals for house purchases rose in July for a third consecutive month,

Mortgage approvals for house purchases increased by 800 in July, to 65,400. Approvals for remortgaging decreased by 2700 in July, to 38,900.

Net borrowing of mortgage debt by individuals decreased by £0.9 billion to £4.5 billion in July, compared to a £3.2 billion increase to £5.4 billion of net borrowing in June.

Ben Allkins, Head of Mortgages and Protection at Just Mortgages, said “While net borrowing slowed in July, it’s encouraging to see another monthly increase in mortgage approvals, albeit only marginal again. There’s no question that July marked the usual start of a quieter summer season, although positive movement from lenders in anticipation of the August base rate cut certainly gave brokers a great headline to proactively share with clients and encourage activity.

“While perhaps not at full steam, we still saw high levels of business activity across all areas of Just Mortgages, with strong demand for valuation requests, buyer registrations and mortgage appointments. Another increase in consumer credit borrowing is certainly something to take note of, particularly for advisers and the pressures still being felt by many borrowers.”

Sarah Coles, Head of Personal Finance at Hargreaves Lansdown said “Mortgage approvals are up again, for the third consecutive month – after falling for four. It’s a slow climb, and the mortgage market is hardly shooting the lights out, but it’s another sign of a slow recovery from the post-stamp-duty-holiday slump.

“The context is important. Approvals for purchases came in at 65,400. Last year, approvals averaged 62,700 a month, and in the year before the pandemic, the 12-month average was 66,700. It means this is a relatively steady set of figures.

“The jury is out on what happens next. June’s pick up in buyers, sellers and sales didn’t last into July and there are early signs that property prices fell in August. Buyers have been hit with a combination of high house prices, relatively high mortgage rates, uncertainty over the future of the jobs market, and worries about Budget speculation on possible property taxes. It means that, despite the small bump in approvals, we could see more buyers get cold feet over the autumn.”

Richard Pinch, Senior Director of Risk, at Broadstone, said “Mortgage borrowing dipped slightly in July after June’s surge, largely driven by a drop in rates and buyers reaching the end of the typically busy Spring period.

“Despite rising inflation fears and ongoing market uncertainty, mortgage rates look likely to continue their downward trajectory going into Autumn which should support sentiment despite rumours swirling around property taxation and a slowdown in future Bank of England rate cuts.

“Similarly, the FCA’s continued efforts to ease regulation in the mortgage market to support home ownership should also drive a boost inlending once those reforms begin to take effect.”