Mortgage borrowing by UK households jumped in June as net lending rose to £7.7bn from £3.3bn in May, while mortgage approvals for house purchases increased to 58,200 from 56,600, according to the Bank of England's (BoE) latest Money and Credit report.

Net borrowing of mortgage debt by individuals was above the previous six-month average of £4.9bn, the BoE said. The annual growth rate for net mortgage lending increased slightly to 3.6% in June from 3.5% in May.

Although approvals improved, they remained below the previous six-month average of around 61,400, while remortgage approvals inched up to 34,200 in June, from 33,800 in May.

Households’ deposits with banks and building societies increased by £6.3bn in June, following net deposits of £5.6 billion in May. This was driven by households depositing an additional £2bn into ISAs, £1.6bn into interest-bearing time accounts and £400m into non-interest bearing accounts. The bank stated that these inflows were partially offset by withdrawals of £1.3bn from interest-bearing sight deposit accounts.

Consumer credit borrowing rose slightly to £1.8bn, with stronger credit card borrowing offsetting weaker personal lending, while households deposited a further £6.3bn with banks and building societies. The effective interest rate on newly drawn mortgages also increased to 4.35% from 4.22%.

Commenting on today's BoE June figures, Richard Pike, sales and marketing director at Phoebus Software, said: "May's 15% drop in approvals followed a sharp spike in April as buyers rushed to lock in rates, so some correction was always likely. June's figures are a mixed picture rather than a clean return to normality.

“That jump points to April's approvals working through to completion, and to the ongoing wave of fixed-rate maturities feeding through into gross lending, rather than any fresh surge in new buyer demand."

Paul Heywood, chief data and analytics officer at Equifax UK, argued that the door "looks firmly shut" on the prospect of rate cuts for the foreseeable future.

He said: "Those on variable mortgage rates are unlikely to see any reduction in their monthly bills this year, while the rising possibility of rate hikes is adding another layer of uncertainty to households, which have so far proven resilient but are without doubt feeling the squeeze."

Rachel Geddes, strategic lender relationship director at Mortgage Advice Bureau, added: "Net mortgage approvals rose to 58,200 in June as demand holds up, with the market watching tomorrow's rate decision closely."

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