Mortgage approvals for residential property purchases rose slightly in July to its highest level since March 2016, despite a general fall in growth of so-called consumer credit, such as credit cards, bank loans and car purchase deals, according to figures from the Bank of England.

The number of new mortgage loans approved, but not yet lent, to borrowers rose by 3,400 from June’s level to reach 68,700, which is similar to the sort of levels seen earlier this year.

John Eastgate, sales and marketing director of OneSavings Bank, said: “Mortgage approvals have recovered from last month’s lows despite persistent economic uncertainty. This is impressive given the combination of inflation and low wage growth, although the low levels of purchase activity should be seen as an indicator of still fragile consumer confidence.” 

Growth in mortgage approvals was supported by a surge in approvals for remortgaging, at 46,231, which is the highest level since December 2016.

Eastgate added: “Approval levels are being supported by remortgage activity, which continues to surge as minimal upward pressure on interest rates encourages borrowers to take advantage of record low mortgage rates. We expect this activity to continue growing through October and November before evening out toward the end of the year.”
 

The data also reveals that the £3.6bn flow of net secured lending in July was similar to recent months.

Alastair McKee, managing director of One 77 Mortgages, commented: “There’s life in the old dog yet as canny homeowners continue to lock in cheap deals while they can before the spectre of interest rate rises looms.

“What is encouraging is that new mortgage approvals are not tailing off but putting in a surprisingly upbeat performance in the face of some pretty intimidating headwinds.

“Don’t forget that annual UK house market growth has more than halved in a year, transaction levels have been dropping, business investment is down and retail sales growth slowed at the fastest pace in over a year last month.

“Borrowers don’t seem to be paying any of that much attention and first time buyers could be driving a lot of this traction. They won’t want to miss the party and will be keen to take advantage of low rates themselves.

“However, new approvals are unlikely to be to blame for swollen stamp duty receipts confirmed this week. In fact that’s more likely to be explained to some degree by the stamp duty surcharge on second homes.”