Mortgage approvals on house purchases for July sit at 61,985 up slightly (+2.3%) from 60,611 in June.
Following revised figures from the Bank of England for June, this marks two consecutive months of positive growth in mortgage approval levels with the monthly figure having increased since May.
Approvals remain considerably higher (+26.5%) than the 49,015 seen in July 2023.
There is also optimism for further mortgage approval increases in the coming months, especially if another bank rate cut materialises in September.
In reaction to this data, mortgage and property experts have shared their thoughts with IFA Magazine.
CEO of Octane Capital, Jonathan Samuels, commented: “Revised figures show that we’ve now seen two consecutive months of positive growth where mortgage approvals are concerned and this is in addition to the fact that monthly mortgage approvals have remained above the 60,000 threshold since February of this year.
“This suggests a property market that is very much on the up and we expect this outlook to only improve further following the Bank of England’s decision to cut interest rates for the first time in four years.
“Whilst the reduction itself may have been marginal at 0.25%, it’s likely to act as a floodgate moment for the housing market, with more buyers looking to make their move as the monthly cost of a mortgage continues to ease.”
Nathan Emerson, CEO of Propertymark, comments: “It is extremely positive that consumers are continuing to approach the housing market with confidence and that current interest rates have not deterred people from making their next housing move.
“It’s important to stress that wider economic conditions are still on the pathway to full recovery, but we are certainly witnessing greater confidence when compared to twelve months ago. When conditions permit, it would be welcome news to see the Bank of England further lower interest rates, but it has to be appreciated that this must happen in a controlled manner so as not to undo the progress we have seen.”
Tony Hall, Head of Business Development at Saffron for Intermediaries, comments: “While today’s figures are not what we expected, the housing market still looks poised for a busy autumn. With the Bank of England’s first interest rate cut since 2020 last month, we’re seeing a wave of new sub-4% deals energising the mortgage market. Buyers are eager to jump back in, and with Zoopla reporting that listings have hit a seven-year high, this momentum will only grow further.
“That said, there will still be hurdles for prospective buyers as today’s market is a different ballgame compared to the years of ultra-low rates we had before. That’s why borrowers need to explore the growing range of mortgage options out there. Whether you’re a first-time buyer, self-employed, or building your own home, there’s a product designed to meet your specific needs, making it easier for more people to find a mortgage that fits and secure the home they want.”
Charlotte Nixon, mortgage expert at Quilter: “The latest data on UK mortgage borrowing and property transactions offers an interesting snapshot of the current state of the housing market, which looks to be in recovery mode after a turbulent few years. In July, net borrowing of mortgage debt increased to £2.8 billion, marking the highest level since late 2022. This rise points to a resilient demand for property, even as the market faces broader economic uncertainties from high interest rates. It’s clear that many buyers are seizing opportunities, likely driven by a mix of stabilising market conditions and the anticipation of potential shifts in interest rates. The proliferation of 4% mortgage deals also helps boost demand.
“Mortgage approvals for house purchases also climbed to 62,000 in July, the highest figure since September 2022 reflecting a growing confidence among prospective buyers, suggesting that more people are willing to enter the market despite ongoing economic pressures.
“The provisional figures on UK residential transactions provide further context to these trends. The seasonally adjusted estimate shows a slight dip in residential transactions for the second consecutive month, down less than 1% from June. This modest decrease aligns with the typical mid-summer slowdown, as many take a break from house hunting during the holiday season.
“Interestingly, the non-seasonally adjusted data tells a different story, with residential transactions rising by 7% in July compared to the previous month. This increase suggests that, despite seasonal trends, the underlying demand for property remains robust. Additionally, non-residential transactions saw solid growth, with both seasonally and non-seasonally adjusted figures up in July, indicating a broader recovery in the property market.
“Overall, while the summer months have introduced some expected slowdowns, the market’s underlying strength is evident in the continued rise in mortgage borrowing and transaction volumes. As we look ahead, much will depend on how interest rates evolve and whether they will continue to support this cautious optimism. The ongoing demand for new mortgages and the increase in property transactions suggest that many people are seeing opportunity in the current market, positioning the housing sector for a potentially stronger finish to the year.”
Founder and CEO of easyMoney, Jason Ferrando, commented: “We’ve already seen mortgage approval numbers stabilise so far in 2024, following the greater degree of market stability that has come from a hold on the base rate since September of last year.
“The number of buyers entering the market is now considerably higher than we saw this time last year and we expect market activity to increase further, driven by the recent base rate reduction and with hopes of another on the horizon – perhaps as soon as September.”
Laith Khalaf, head of investment analysis at AJ Bell: “The property market is looking perky as mortgage approvals reached their highest level in almost two years. Net mortgage approvals for house purchases hit 62,000 in July according to the Bank of England, the highest reading since September 2022.
“Meanwhile house prices have jumped at the fastest annual pace since December 2022, rising by 2.4% in the year to August according to Nationwide. We’re now only 3% shy of the record level reached in the summer of 2022. Rising house prices are of course a double-edged sword, providing comfort to homeowners while delivering despair to those desperately trying to get on the housing ladder.
“There are a number of factors behind the tick up in the property market, but chief amongst them are falling mortgage rates. The Bank of England has just cut interest rates for the first time since 2020, and expectations of looser monetary policy have been feeding into mortgage rates for some time now. The good news for borrowers is there are more rate cuts pencilled in, with markets expecting base rate to fall to 4% by the summer of next year
“We’re also seeing competition in the mortgage market leading to lenders loosening their purse strings a bit. Lloyds is launching a new mortgage for first time buyers which will allow them to borrow up to 5.5 times their annual income, a big jump from the 4.5 times ratio normally allowed. Looser lending requirements might start to ring alarm bells for those who remember the build up to the financial crisis, when unaffordable borrowing ended up pushing banks, homebuyers and everyone else into a deep dark pit from which we are still emerging. Lloyds will at least be requiring a minimum 10% deposit for this mortgage product, which provides some security for the bank, and a bit of a buffer for homebuyers from falling into negative equity.
“Tax on cash interest appears to be high on the agenda for savers, with ISA sales continuing to impress. UK households put £3.8 billion into Cash ISAs in July according to the Bank of England. The October Budget is looming on the horizon and we know it’s not going to be pretty. The Chancellor has committed to not raising the rate of income tax, but that doesn’t preclude sneakier measures to raise the income tax take, such as extending frozen allowances, restricting pensions tax relief, or indeed, cutting the Personal Savings Allowance. We don’t know how likely it is any of these measures will see the light of day, but the message from the top of the Labour party seems to be that a mighty tax reckoning is coming. Best to make full use of available tax shelters then, to dull the blow.”
