Some signs of mortgage market recovery

The Bank of England have released their June report for money and credit statistics showing UK household’s net borrowing was £1.8 billion after large repayments in previous months. The increase can all be accounted for by mortgage borrowing with mortgage interest rates broadly remaining unchanged.

New mortgage rates were 1.77%, an increase of 0.03% on the month and the average interest rate on existing of mortgages was 2.16%, unchanged from May and 0.2% lower than in February.

The mortgage market has shown some signs of recovery in June, but remains relatively weak post coronavirus lockdown.

Households have net borrowed an additional £1.9 billion secured on their homes. This is up from £1.3 billion in May, but weak compared to an average of £4.1 billion in the six months to February 2020.

The increase on the month reflected both more new borrowing by households, and lower repayments. Gross new borrowing was £15.8 billion in June compared to the February level of £23.4 billion.

The number of mortgage approvals for house purchases increased to 40,000 from 9,300 in May, but were 46% below February levels of 73,700. Approvals for remortgages have also increased, to 36,900, but they remain 30% lower than in February.