The value of gross mortgage lending fell from £22.6bn in May to £20.8bn in June, data from the central bank showed.
The Bank of England Money and Credit statistics revealed the gross mortgage repayments dropped by £1.6bn over the same period to £18.7bn.
Mortgage borrowing hits 18-month high
In June, the net borrowing of mortgage debt rose by £2.7bn, up from £1.3bn in the previous month.
Tom Cuppello, director, risk at independent consultancy 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.”
Richard Pike, chief marketing and sales officer at Phoebus, said the increase was “extremely encouraging” for the property market.
The annual growth rate for net mortgage lending increased to 0.5% in June, up from 0.3% in May. The Bank of England said this continued a trend seen in recent months.
Mortgage approvals stay stable
Mortgage approvals for house purchases were steady, falling from 60,134 in May to 59,976 in June.
Approvals for remortgaging declined slightly from 29,267 to 27,514.
Ashley Webb, UK economist at Capital Economics, said this was further evidence that the drag on activity was “starting to fade” and suggested the “economic recovery may be a bit stronger than most analysts expect”.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said mortgage approvals were a “reliable indicator” of future market activity.
However, with speculation that the base rate would fall, Leaf said “it is inevitable… that buyers will delay moving plans if mortgage costs are likely to be lower in the near future”.
Small rise in interest rates
The interest rate paid on newly drawn mortgages rose by 0.03% to 4.82% in June. The rate on the outstanding stock of mortgages increased by 0.04% to 3.65%.
Webb said the “lagged effect of the rebound in the average quoted mortgage rate” from 4.6% in February to 4.9% in June could result in house prices and activity flatlining for the rest of the year.
He added: “But [Capital Economics’] view that interest rates will fall from 5.25% to 3% by the end of next year instead of 4% as investors anticipate, points to a renewed pick-up in 2025.”
“Overall, with further signs that the drag on activity from higher interest rates is starting to fade, at the margin today’s release may mean the Bank of England is a bit less likely to cut interest rates from 5.25% to 5% on Thursday, although it remains a very close call,” Webb said.
Shekina is the deputy editor at Mortgage Solutions and commercial editor at Mortgage Solutions and Specialist Lending Solutions. She has nearly eight years of experience in the B2B publishing market, having previously covered the hospitality, retail, pet, accounting and jewellery sectors.
Shekina has worked for Mortgage Solutions and Specialist Lending Solutions for almost five years. Here, she covers the market’s breaking news stories, engages with professionals in the sector, and oversees any commercially agreed content in partnership with mortgage-related companies.
This includes presenting webinars and hosting roundtable discussions on developing themes in the mortgage sector.
She is an NCTJ-trained journalist and was nominated for the Headline Money Awards Mortgage Journalist of the Year in 2021.
In her spare time, Shekina likes to read, travel, listen to music and socialise with friends.
She currently reports on current events in the mortgage market and liaises with financial clients to produce sponsored content.
Follow her on Twitter at @ShekinaMS
