UK mortgage approvals edge lower
By Benjamin Chiou
Date: Monday 29 Jul 2024
(Sharecast News) - Mortgage approvals in the UK fell marginally in June as the upwards momentum seen earlier this year continues to tail off, though there are signs that the housing market is beginning to stabilise.
Net mortgage approvals for house purchases slipped to 59,976 last month, down slightly from the 60,134 recorded in May, according to data released on Monday by the Bank of England.
Approvals have declined since March, when they reached 61,080 - their highest since September 2022. However, last month's figure remains significantly higher than the 53,620 recorded in June 2023.
Meanwhile, approvals for remortgaging fell to 27,500 from 29,300 the month before.
Individuals borrowed a net £2.7bn for mortgages in June, nearly double the £1.3bn borrowed in May.
Commenting on the data, the EY ITEM Club said that while mortgage rates have edged down over recent months, it doesn't expect them to fall much further and a recovery in demand will likely be modest.
"Mortgage demand has remained broadly stable since February, with the impact of a gradual uptick in quoted mortgage rates largely offset by recovering household finances and confidence," said Peter Arnold, the UK chief economist at EY.
"With swap rates having drifted down in July, and some lenders lowering mortgage rates in response, approvals may edge up modestly in the coming months. But with market pricing already factoring in a gradual loosening of monetary policy over the coming year, the EY ITEM Club doesn't expect mortgage rates to fall much further. And with affordability still very stretched, the chances of a strong recovery in activity look low."
The BoE also announced on Monday that net consumer credit borrowing fell slightly in June to £1.2bn, from £1.5bn inn May, with the annual growth of consumer credit easing to 8.0% from 8.4%.
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