Mortgage Lending Rises Despite Higher Rates
June saw a significant increase in mortgage lending and approvals, defying elevated interest rates.
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Mortgage lending saw a substantial increase in June, reaching £7.7 billion, a significant rise from £3.3 billion in May, according to Bank of England figures. The number of mortgage approvals for home purchases also climbed to 58,200 during June, up from 56,600 in the preceding month. This growth occurred against a backdrop of rising mortgage rates.
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The average rate for a two-year fixed residential mortgage was recorded at 5.62% on Wednesday. Experts suggest that the modest increase in mortgage approvals may indicate a degree of economic stability, following recent decisions by the Bank of England to maintain interest rates at 3.75%. However, Nathan Emerson, chief executive at Propertymark, noted that while confidence might be improving, activity levels have not yet fully recovered, with approvals remaining below the average of the previous six months.
Consumer Credit Trends
In addition to mortgage activity, net borrowing of consumer credit also increased in June, rising to £1.8 billion from £1.7 billion in May. A primary contributor to this rise was credit card lending, which grew to £0.9 billion in June, an increase from £0.6 billion in May. Other forms of consumer credit, such as car loans and personal loans, experienced a decrease.
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Gareth Lewis, deputy chief executive of specialist lender MT Finance, commented on the market conditions, stating that "Volatile funding rates are the real issue." He added that while expectations pointed towards a lower interest rate environment this year, global events have altered that outlook. Lewis suggested that the new Prime Minister needs to implement measures to stimulate the housing market and encourage transactions, which would also benefit the broader economy.
Questions this report answers
+How much did mortgage lending increase in June?
Mortgage lending rose to £7.7 billion in June, up from £3.3 billion in May. This marks a significant jump, showing stronger activity despite higher interest rates.
+What were the average mortgage rates in June?
The average two-year fixed residential mortgage rate was 5.62% in June. This reflects the elevated borrowing costs still affecting the market.
+How many mortgage approvals were there in June?
There were 58,200 mortgage approvals for home purchases in June, an increase from 56,600 in May. Experts see this as a sign of cautious economic stability.
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