The increase in mortgage borrowing may indicate an ‘uptick in confidence’ as rates continue to ease.
The amount of mortgage lending has more than doubled, according to the latest figures from the Bank of England Money and Credit Report.
In June individuals borrowed £2.7 billion, an increase of £1.4 billion since May.
Meanwhile, net mortgage approvals for house purchasing (an indicator for future borrowing) remained unchanged at 60,000.
“An increase in borrowing may indicate an uptick in confidence among consumers but we know that the pressure for homeowners is far from over,” commented Richard Lane, Chief Client Officer at StepChange Debt Charity.
Many are now turning their attention to this week’s base rate announcement, which has divided expert opinion on whether interest levels will change after a year of stagnation.
However, this is not the only factor in determining whether mortgage rates will continue to fall, with affordability still proving to be a significant obstacle.
“The toxic combination of high inflation, high borrowing costs and falling real wages made it significantly harder for movers to secure the properties they wanted,” explained Alice Haine, Personal Finance Analyst at Bestinvest by Evelyn Partners.
“A UK rate reduction would deliver instant relief for new borrowers and those on trackers, but it won’t soften the struggle for mortgage holders locked into fixed rate deals with some time left to run,” she continued.
Despite this, July has seen many lenders reduce rates in response to lower borrowing costs, with the lowest fixed rate dropping below 4% for the first time since April.
With further cuts potentially on the horizon, this could be the opportunity for those on the fence to now seek a new deal.
However, it’s important to carefully consider all aspects of a mortgage option before committing, and make sure you get professional advice if you’re uncertain on your situation.
