Mortgage borrowing hits two year high of £2.8 billion in July

Meanwhile, net mortgage approvals also reached their highest point since 2022.

The amount of mortgage debt increased by £0.2 billion between June and July, according to the Bank of England’s Money and Credit Report.

It found that net mortgage borrowing hit £2.8 billion in July 2024, marking its highest point since November 2022.

This may be an encouraging sign for the housing market, as it suggests that there is an increased demand from buyers following a tumultuous couple of years.

In the weeks leading up to the Bank of England base rate cut in August, many providers began pre-emptively reducing rates, with Nationwide BS being the first to offer a fixed mortgage deal below 4.00% at the end of July.

With mortgage rates still falling, many are hopeful that the market will continue to recover.

Mortgage approvals rise

Meanwhile, net mortgage approvals for house purchases (which don’t include cancellations) rose from 60,600 in June to 62,000 in July, the highest point since September 2022 when Liz Truss announced the mini-Budget.

“It is positive to see a rise in mortgage approvals, after a dip a month prior. This provides a positive sentiment for the market and comes at a time when mortgage interest rates are falling,” explained Rachel Springall, Finance Expert at Moneyfactscompare.co.uk.

However, approvals for remortgaging saw a month-on-month drop to 25,100 in July, continuing a steady decline that began in March 2024.

Is now the right time to commit to a deal?

The uptake in both mortgage borrowing and approvals may point to a growing confidence in the market, with August continuing to see significant cuts to fixed mortgage rates following the lowering of the base rate to 5.00%.

Despite this, prospective borrowers may still face challenges as housing prices witnessed the fastest annual growth since December 2022, according to Nationwide BS’ House Price Index.

It found that the average property price increased 2.4% year-on-year to now stand at £265,375.

“The country still needs to address the lack of affordable housing which will take time, so in reality some borrowers will need to be patient before they get their foot onto the property ladder,” added Springall.