Mortgage market ‘robust’ ahead of interest-rate decision

The number of mortgage approvals in the UK was “broadly stable” last month, the Bank of England has said.

There were 59,976 net approvals in June, down slightly from 60,134 in May, according to officials figures on Monday.

The Bank also said net borrowing of mortgage debt increased from £1.3bn in May to £2.7bn in June.

It comes ahead of the Bank’s latest interest rate decision on Thursday.

Commentators said the figures demonstrated a “strong foundation” for further growth in the housing market, which appears not to have been significantly affected by the recent general election.

But they cautioned much would depend on whether or not rates are cut later this week.

Better mortgage deals emerging

Industry figures hope that a reduction in the cost of borrowing will boost home sales, with better mortgage deals encouraging potential buyers.

Interest rates have been held at 5.25% seven times in a row, but financial markets have priced in a 60% chance of a cut on Thursday.

It marks an improvement on last week, when the chances of a cut were estimated at 46%.

Last week Nationwide became the first major lender to introduce a mortgage deal for less than 4%. Barclays and TSB also announced reductions the next day.

Chief executive of easyMoney Jason Ferrando said: “Mortgage approval levels have remained largely robust in recent months and this has provided a strong foundation for further growth.

“With the election now behind us, we expect there will be a significant uplift in the number of buyers looking to make their move over the coming months and this will only be intensified as and when interest rates are reduced.”

Bank-rate decision pending

Lucian Cook, from estate agent Savills, said: “June’s mortgage approvals provide further evidence that the general election had relatively little impact on home buyer sentiment, and that a pick-up in activity will depend more on what happens to the Bank base rate in [the] coming months.”

Alice Haine, from investment platform Bestinvest by Evelyn Partners, said: “If a rate cut materialises this week, mortgage demand may ramp up from here as more people look to take advantage of improving lending conditions.

“Many buyers have been waiting patiently for borrowing costs to ease further before making a move, so that first rate cut set against the backdrop of a more stable political landscape could provide the impetus to get going on those plans.”