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Mortgage approvals in UK fall in June but remortgaging rises

Staff Writer |
Mortgage approvals fell in June amid a stagnant housing market though remortgage figures rose as borrowers sought out new deals ahead of a potential interest rate increase.

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The number of new mortgages by the main high street banks fell 2.1% from a year earlier, UK Finance figures showed. Total mortgages for house purchases fell to 47,175 from 49,527 and loans for remortgaging rose to 29,819 from 28,832. Gross mortgage lending rose to £23.5bn from £23bn.

With house sales in the doldrums banks and building societies are competing in the remortgage market, which has been fuelled by speculation about the Bank of England's intentions on interest rates. After holding off from increasing borrowing costs in May the BoE is widely expected to announce a rate rise in August.

Henry Woodcock, principal mortgage consultant at IRESS, said: "While a base rate rise has not yet materialised, the likelihood of an increase is still encouraging remortgagers and first-time buyers to secure the best available deals.

Lenders are offering an array of incentives, not just a competitive rate, with affordability criteria being relaxed to provide more bespoke deals to applicants. So, there is evidence that lenders are still fiercely competing to secure volume."

Credit card lending rose 4.7% in June from a year earlier and outstanding levels of card borrowing increased 5.6%. Personal deposits rose 1.3% while deposits in instant access accounts grew 4.2%.

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