Mortgage borrowing doubles to £2.7bn in June

Consumers borrowed £2.7 billion of mortgage debt in June, up from £1.3 billion in May according latest Bank of England data.

Net mortgage approvals for house purchases remained broadly stable at 60,000 in June, while approvals for remortgaging decreased from 29,300 to 27,500 over the same period.

The annual growth rate for net mortgage lending rose to 0.5% last month, after a rise to 0.3% in May.

Mortgage approvals for house purchases, an indicator of future borrowing, remained broadly stable at 60,000 in June.

Gross lending fell 8% to £20.8 billion in June, from the previous month, while gross repayments slipped 7.9% over the same period to £18.7 billion.

Commenting on the data Richard Lane, Chief Client Officer at StepChange Debt Charity, said “An increase in borrowing may indicate an uptick in confidence among consumers but we know that the pressure for homeowners is far from over. Our recent research revealed one in four (23%) mortgage holders are using credit to keep up with their mortgage, a figure which may well increase as more households secure a new fixed-rate deal and see their mortgage costs take up a much higher proportion of their income.

“It’s yet to be seen whether interest rates will begin to fall later this week, but regardless of whether they do, mortgage servicing costs are significantly higher than just a few years ago. Meanwhile, despite energy bills being less of a burden in summer, cost of living pressures haven’t gone away, and combined with inflated housing costs, many households remain vulnerable to worsening debt.”

Paul Heywood, Chief Data & Analytics Officer at Equifax said “The latest figures from the Bank of England show an increase in mortgage lending and a fall in consumer credit borrowing as the summer gets into full swing.

“All eyes now are on the Monetary Policy Committee August base rate decision. A number of high street lenders have been cutting mortgage rates, but hotter than expected inflation data has cast fresh doubts on a central bank rate cut and we’re yet to see the fallout of England’s late Euros surge in next month’s figures. Either way, prices are still rising, we’ve seen persistent growth in highly utilised credit cards*, and households will continue to feel the pinch for some time.

“Tom Cuppello, Director, Risk at Broadstone, said “Mortgage borrowing reached its highest level in over 18 months in June 2024, more than doubling from the previous month’s total as confidence appears to be returning to the property market.

“Mortgage rates continue to creep down but although there has been no significant reduction it appears many buyers are no longer putting their property purchase plans on hold. With this week’s interest rate decision on a knife-edge, lenders and borrowers will be closely watching the Bank of England’s communications on Thursday to gauge the path forward.”