Bank of England Reports Steady Mortgage Approvals in June, Ahead of Interest Rate Decision
In its latest report, the Bank of England revealed that the number of mortgage approvals in the UK remained “broadly stable” last month. According to officials figures released on Monday, there were 59,976 net approvals in June, slightly lower than the 60,134 recorded in May. The Bank also noted an increase in net borrowing of mortgage debt, rising from £1.3bn in May to £2.7bn in June.
This update comes just days before the Bank’s interest rate decision on Thursday, with analysts and industry experts closely watching for any changes. Commentators have stated that these figures highlight a strong foundation for continued growth in the housing market, despite the recent general election. However, they also cautioned that much will depend on the outcome of the interest rate decision this week.
Industry figures are hopeful that a potential rate cut would lead to better mortgage deals, ultimately encouraging more potential buyers to enter the market. The Bank of England has held interest rates at 5.25% for seven consecutive times, but financial markets have priced in a 60% chance of a cut this week. This is an improvement from last week’s estimated 46% chance.
In recent days, major lenders such as Nationwide, Barclays, and TSB have all announced reductions in mortgage deals, with Nationwide even introducing a deal for less than 4%. Chief Executive of easyMoney, Jason Ferrando, stated that the continued robustness in mortgage approvals provides a strong foundation for further growth in the market. He also predicted an increase in the number of buyers looking to make a move in the coming months, especially if interest rates are reduced.
Lucian Cook, from estate agent Savills, also commented on the report, stating that it further proves the general election had minimal impact on home buyer sentiment. He added that the pick-up in activity will depend more on the Bank base rate in the coming months. Alice Haine, from investment platform Bestinvest by Evelyn Partners, echoed this sentiment, stating that if a rate cut is implemented this week, mortgage demand may increase as potential buyers take advantage of better lending conditions. She also noted that many buyers have been waiting for a rate cut before making a move, and the stable political landscape could provide the impetus for them to do so.
