The Bank of England has reported that net mortgage approvals for house purchases increased from 49,000 in April to 50,500 in May, while approvals for remortgaging saw a rise from 32,500 to 33,600 during the same period.
Individuals repaid, on net, £0.1 billion of mortgage debt in May. This followed the record £1.5 billion net repayments in April (if the period since the onset of the Covid-19 pandemic is excluded).
The ‘effective’ interest rate – the actual interest rate paid – on newly drawn mortgages rose by 10 basis points, to 4.56% in May.
Net borrowing on consumer credit by individuals decreased from £1.5 billion in April to £1.1 billion in May.
Steve Seal, CEO, Bluestone Mortgages, said: “While today’s figures show an uptick in mortgage approvals, this does not take into account the Bank of England’s recent 0.5% rate rise in its bid to ease inflation. However, as inflation continues at higher-than-expected levels, so too will the financial pain for those looking to take their first or next steps onto the property ladder. With the average two-year fix now above 6% and the cost of living likely to remain high for the foreseeable future, affordability is the key challenge facing consumers.
“For those struggling to keep up with mortgage repayments or worried about how to step onto or up the property ladder, we urge you to seek guidance. In times like these, it’s the duty of our industry and at the heart of what we do to support homeowners and buyers by signposting them to the help available as well as innovating to meet their evolving needs.”
Emma Cox, managing director of real estate at Shawbrook, added: “Buyer confidence has remained robust despite the challenges facing the property market. Those looking to purchase properties will be trying to act quickly to offset the risk of further house prices increases, and homeowners due to re-mortgage will want to secure rates swiftly, to protect themselves from further interest rate rises.
“The investment landscape for part-time landlords is facing challenges with higher mortgage rates and increased cost and regulatory pressures. However, professional investors are poised to seize the opportunities amidst continued high rental demand. Portfolio landlords, while aiming for higher yields to counter rising costs, are also exploring diversification strategies.
“This could involve expanding their investments geographically or focusing on houses in multiple occupation (HMOs), which offer greater revenues and yields compared to traditional buy-to-let properties. Specialist financing will play a pivotal role for these landlords as they actively pursue customised solutions tailored to their unique needs.”
