Mortgage approvals rise in June as market shows signs of recovery

The number of mortgage approvals for house purchases increased to 40,000 in June, up from the record low of 9,300 in May, according to new data published by the Bank of England (BoE).

The Bank suggested the mortgage market had shown signs of recovery during June, but remained “relatively weak” with the figure still 46% below February’s pre-pandemic level of 73,700.

Approvals for remortgage – which capture remortgaging with a different lender – also increased in June to 36,900, but the BoE revealed that this remained 30% lower than in February.

“Small signs of recovery are starting to be seen across the industry, as mortgage lending picks up and housing markets reopen across the UK,” Bluestone Mortgages managing director, Steve Seal, commented. “This is largely down to the work of lenders and advisers in supporting borrowers throughout the crisis and helping kickstart market activity.
 
“The specialist market has also played a crucial role in the recovery of the sector – and it will continue to do so as we emerge from the crisis. Thousands of people have been financially impacted during the COVID-19 pandemic, and many consumers could find themselves in a more precarious financial situation than they were pre-crisis. This could lead to a boom in demand for specialist lending following the pandemic.”

Landbay CEO, John Goodall, added: “It is good to see the market bouncing back strongly and house prices holding up as a result of the increasing demand. While the stamp duty holiday doesn’t show in these figures for June, it should continue to help support the recovery and I expect July’s mortgage lending to be almost back to pre-COVID-19 levels of demand.”

The Bank’s figures also showed that on net, households borrowed an additional £1.9bn secured on their homes during June. This was higher than the £1.3bn in May but the BoE described the figure as “weak” compared to an average of £4.1bn in the six months to February 2020.

This increase on the month reflected both more new borrowing by households and lower repayments, the BoE suggested, as the data revealed that gross new borrowing was £15.8bn in June – remaining below the pre-pandemic February level of £23.4bn.

Legal & General Mortgage Club director, Kevin Roberts, said: “There are still challenges facing borrowers up and down the ladder, and particularly those who have smaller deposits who need to access higher LTV mortgages of 90% and above.

“While these buyers currently face a more limited choice of mortgage, lenders are eager to return to this area of the market once they are sure they can manage the high levels of demand from customers. In the meantime, buyers who are unsure of their options should speak with an independent mortgage adviser to find out what alternative solutions are available to them.”

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