Approvals for remortgaging with a new lender also climbed by 200 to 41,800, marking the highest monthly total since October 2022, when approvals peaked at 50,000.
Residential mortgage borrowing grew notably, with net lending jumping £3.1bn to £5.3bn last month – up from a £2.8bn hike in May. This pushed the annual growth rate for net mortgage lending up from 2.6% to 2.8%.
Ian Futcher, financial planner at Quilter, said: “The latest Bank of England Money and Credit figures illustrate the pressures the housing market continues to face, with the aftereffects of the stamp duty threshold changes, alongside ongoing affordability issues and the yearly summer lull all weighing heavily.
“Net borrowing had fallen off a cliff in April, the first month post stamp duty changes, but this has been steadily increasing since. Net borrowing increased by £3.1bn to £5.3bn in June. This is up from £2.2bn of net borrowing in May, but is still a far cry from the £13bn seen in March.
Gross mortgage lending surged to £23.9bn in June from £20.6bn the previous month, while gross repayments also increased, rising to £18.8bn from £17.6bn.
On the interest rate front, the average rate on new mortgages continued its downward trend, falling for the fourth straight month to 4.34% in June from 4.47% in May. Meanwhile, the average rate on existing mortgages edged up slightly to 3.88% from 3.87%.
Hina Bhudia, partner, Knight Frank Finance, said: “The housing market continues to move sideways. Mortgage rates and purchasing activity are largely flat, and the pace of annual house price growth has slowed to a crawl since April’s stamp duty changes.
“That said, there are good reasons to expect momentum to build as we move through the summer and into the busier autumn market. Wage growth remains healthy and recent comments from Bank of England policymakers suggest their focus later this year will shift toward supporting employment rather than reining in inflation. That gives us scope to see further marginal reductions in mortgage rates over the coming months. Lenders are operating on tight margins, but they have shown they will pass on any drop in funding costs quickly, which should help activity stage a moderate recovery.”
Peter Stimson, head of product at MPowered Mortgages, remarked: “Mortgages rarely hog the limelight when it comes to the property market.
“But the abrupt exit of the stamp duty stampede has left a vacancy centre stage, and mortgages might just be emerging from the wings to take it.
“Rather than falling away after the temporary stamp duty incentive ended in April, first-time buyer activity is proving robust thanks to changes in the mortgage market.
“The Bank of England’s data shows that the average interest rate on new mortgages has fallen for four months in a row, and this is encouraging more people to apply for a mortgage to help them buy their first home.
“Mortgages are getting cheaper, and with the supply of homes for sale at its highest level in a decade, property prices are levelling off or even falling in some areas. All this is creating a buyer’s market and nudging would-be buyers who are fed up with rising rents to get off the fence.
“With new affordability rules making it easier for people to get their first mortgage, and allowing lenders greater flexibility in the amount they lend, the mortgage market is playing an essential role in keeping the cooling property market moving.
“With the Bank of England widely expected to reduce its base rate again next week, stress rates – the rate at which borrowers’ affordability is calculated at – could go down even further, allowing even more borrowers into the market.”
