Approvals have dropped since March, when they hit 61,080 – their highest since September 2022
Mortgage approvals in the UK dropped slightly in June as the upwards momentum seen earlier this year continues to tail off, though there are indications that the housing market is beginning to stabilise.
Net mortgage approvals for house purchases declined to 59,976 last month, down marginally from the 60,134 recorded in May, according to data released on Monday by the Bank of England.
Approvals have dropped since March, when they hit 61,080 – their highest since September 2022. Nevertheless, last month’s figure remains significantly higher than the 53,620 recorded in June 2023.
Meanwhile, approvals for remortgaging dropped to 27,500 from 29,300 the month before.
Individuals borrowed a net £2.7 billion for mortgages in June, nearly double the £1.3 billion borrowed in May.
Commenting on the data, the EY ITEM Club said that while mortgage rates have edged down over recent months, it does not expect them to decline much further and a recovery in demand will likely be modest.
Mortgage demand has remained broadly steady since February, with the impact of a gradual rise in quoted mortgage rates largely offset by recovering household finances and confidence, according to Peter Arnold, the UK chief economist at EY ITEM Club.
With swap rates having edged down in July, and some lenders reducing mortgage rates in response, approvals may edge up modestly in the coming months. But with market pricing already factoring in a gradual loosening of monetary policy over the coming year, the EY ITEM Club does not expect mortgage rates to decline much further. And with affordability still very stretched, the possibility of a strong recovery in activity look low, he added.