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Bank of England mortgage approvals: "Lower mortgage rates put the jump leads on the market in July"

ended 30. August 2024

The Bank of England has this morning published its latest Money and Credit Report (July 2024). It showed that individuals borrowed, on net, £2.8 billion of mortgage debt in July, the highest since November 2022 (£3.3 billion), and up from £2.6 billion in June. It also revealed that net mortgage approvals for house purchases increased to 62,000 in July, the highest since September 2022 (65,100), and up from 60,600 in June. By contrast, approvals for remortgaging fell to 25,100 in July, from 27,300 over the same period. Newspage asked brokers for their views, below.

8 responses from the Newspage community

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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Lower mortgage rates put the jump leads on the market in July. Mortgage demand didn’t take its usual summer holiday this year and remained strong throughout July and August. Lenders reducing rates have encouraged borrowers that now is a good time to make their move, especially when there are indications of tougher times ahead. Strike while the iron and the weather is hot.
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Darryl Dhoffer
Founder at The Mortgage Geezer
Mortgage approvals are gaining momentum, that much is clear. The thirst for homeownership has been quenched by the nectar of lower mortgage rates. However, a further potential rise in inflation could potentially prove a drag and the already infamous Autumn Budget is looming. Hopefully, the Bank of England will give us another reduction in the Base Rate before the year is out, which will support demand and drive activity.
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Simon Bridgland
Director at Charwin Private Clients
The mortgage market went through the gears in July. If the general positive sentiment in the market continues, we should see a healthy September after the kids have gone back to school. The clear and present danger ahead is the markets' reaction to the looming slash and pillage Budget in October. That may also determine whether or not we have another base rate cut this year.
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Peter Stimson
Head of Product at MPowered Mortgages
Demand for mortgages in July was stronger than usual in what is a typically quieter month. That shows through very clearly in this data, which is specifically being influenced by house purchase activity. One of the key elements driving demand, along with more properties coming to market, is lower mortgage rates driven by falling swap rates and savage competition between lenders. As mortgage rates have started to fall in the last three months, so the demand for property, understandably, has gone up. We are now seeing much more purchase activity occurring. This is largely an expression of confidence in the market by both sellers and buyers, helped by mortgages gradually becoming more affordable over the last three months. With a slightly false dawn at the start of the year when rates dropped only to increase when inflation proved to be more sticky than anticipated, there is now a much greate feeling of confidence around the market.
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Mark Eaton
COO at April Mortgages
Mortgage demand in July and August exceeded expectations for these typically quieter months, a trend noted by brokers and lenders alike and one that is evident in this data. The symbolic 1 August base rate cut may have contributed to this increased activity. However, uncertainty persists with potential inflation rises and the upcoming Autumn Budget, which borrowers are likely considering. We've observed that borrowers increasingly value not just mortgage rates but also the certainty that comes with fixed payments. After two years of market volatility, many are questioning whether they want to face rate fluctuations every few years. Long-term fixed rates offer protection against economic uncertainty, providing peace of mind and flexibility in financial management, especially important as mortgages are often the largest monthly expense.
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Gabriel McKeown
Head of Macroeconomics at Sad Rabbit - Substack Newsletter
Following this strong data, borrowers will wonder whether this is the calm before the storm or the dawn of a golden age. The August rate cut has been a breath of fresh air for borrowers, yet the path ahead is anything but straightforward, with several potential roadblocks looming on the horizon. Inflation remains a key concern, with expectations that it might rise temporarily to around 2.75% later this year. This uptick, albeit expected to be short-lived, could complicate Threadneedle Street's efforts to continue cutting rates without risking a resurgence in inflation. However, the Autumn Budget could be the true wild card in the deck, potentially throwing a spanner in the monetary policy works should markets react unfavourably to fiscal policies perceived as inflationary. In the intricate dance of monetary policy, the Bank of England must tread carefully, as while the allure of lower rates is strong, the potential pitfalls are numerous.
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Craig Fish
Director at Lodestone Mortgages
Rather than slowing, July and August both witnessed a steady flow of enquiries but not a significant increase as it seems that people were still jetting off on their holidays, which in itself is part of the inflation conundrum that the Bank of England will continue to face for the rest of the year. Whilst a further base rate reduction is likely in November, the energy cap increase will be weighing heavy on the minds of not just consumers but the Monetary Policy Committee. The biggest hurdle, though, is the Budget on the 30th October, and this could unleash a whole host of skeletons from the cupboards, just in time for halloween. We can't sleep easy just yet.
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Graham Cox
Director at Bridging Hub
Chain breaks are still a very common occurrence in this market, either because a party to the transaction can't raise sufficient finance or are struggling to sell their own property. But overall property demand has been noticeably stronger in both July and the usually slow month of August. With another base rate likely in the autumn, the housing market is heating up.