The Bank of England has reported a modest increase in mortgage approvals for house purchases in July, alongside stronger growth in consumer credit and business lending.
Net approvals for house purchases rose to 65,400 in July, an increase of 800 on the previous month.
However, approvals for remortgaging fell by 2,700 to 38,900, reflecting subdued refinancing activity as borrowers continue to adjust to higher interest rates.
Net borrowing of mortgage debt by individuals slowed, falling by £0.9 billion to £4.5 billion in July, compared with a £5.4 billion increase in June. Analysts said the figures suggest that housing demand is stabilising but remains constrained by affordability pressures.
CONSUMER CREDIT
In contrast, consumer credit borrowing edged higher. Net lending rose to £1.6 billion in July, up from £1.5 billion in June. Of this, £0.8 billion came via credit cards, up from £0.7 billion, while borrowing through other forms of consumer credit climbed to £0.9 billion, from £0.7 billion in the previous month.
Business borrowing also gathered pace. The annual growth rate of lending to large businesses accelerated from 6.7% to 8.0%, while lending to SMEs rose from 0.3% to 0.9% – its fastest pace since August 2021. Private non-financial corporations borrowed a net £0.3 billion in July, down from £1.1 billion in June.
INDUSTRY REACTION
Richard Donnell, Executive Director at Zoopla, says: “Mortgage lending for home purchase is up 3% on last year mirroring the steady increase in new sales being agree which have recovered over 2025 and lead mortgage approvals data.
“We expect a continued increase in demand for mortgages as sales continue to increase but the drift higher in average mortgage rates and concerns over property taxes at the upper end of the market may reduce activity in the next one to two months”
STRONG DATA
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “We find many of our buyers and sellers regard the summer holidays as a time for reflection about their property and return ready to make decisions about whether to move or not.
“This year has proved no exception as shown in these solid mortgage approvals, covering buying aspirations over the past few months and so are a better indicator of market health than prices.
“As a result, the next quarter’s activity is likely to be strong. On the one hand, the amount of property stock has helped with agreed sales numbers though the amount of choice is slowing the pace of sales.
“The almost inevitable talk of tax increases on the horizon has resulted in some of our buyers deferring location decisions until the picture becomes clearer, possibly even after the Budget.”
TWISTS AND TURNS
Nathan Emerson, Chief Executive of Propertymark, says: “Considering the many twists and turns within the wider economy currently, it’s extremely positive to see a further uplift in mortgage approvals.
“The resilience of the housing market is often a direct indicator of consumer confidence and affordability, and it has been reassuring to see forward momentum as the year has progressed.
“Hopefully, now that the Bank of England has taken the call to cut the base rate by a further quarter per cent, we should see lenders bringing additional levels of competition to the marketplace.
“Those already on fixed-term mortgage products should already be feeling the combined benefit of three base rate cuts across the year.”
RESILIANT MARKET
Jason Tebb, President of OnTheMarket, says: “The market appears remarkably steady with approvals for house purchases, an indicator of future borrowing, increasing again in July despite wider political and economic concerns.
“With the rate on newly-drawn mortgages falling again for the fifth consecutive month, while the rate on outstanding mortgage stock remained the same, overall there are signs that affordability challenges continue to ease.
“Five base rate reductions from the Bank of England in the past year have helped, along with recently relaxed lending rules and easing of criteria, enabling borrowers to take on bigger mortgages.”
TIME TO ACT
Colby Short, Co-founder and CEO of GetAgent, says: “The latest rise in mortgage approvals will only bring further reassurance to the nation’s homebuyers and sellers that now is the time to act.
“The message we’re hearing from agents across the country is that buyer activity is building, and there’s a growing appetite to transact.
“It’s only a matter of time before this front-end demand starts to convert into transactions, further improving market health and helping to keep house price growth robust.”
SHIFTING NARRATIVE
Simon Gammon, Managing Partner, Knight Frank Finance, says: “Homebuying activity remained resilient through the summer, with approvals for house purchase running just short of the 2019, pre-pandemic average.
“The best fixed-rate mortgages have hovered around 3.7% to 3.8%. Borrowers have adjusted to this level, and many who delayed moving when rates peaked have now decided to act. Rising stock levels, improving mortgage pricing and stronger wage growth have slowly but steadily supported affordability over the course of the year.
“The narrative has shifted in recent weeks, however. A split within the Bank of England’s Monetary Policy Committee, stubborn inflation and wage growth, and relatively robust growth figures have cast doubt on whether the BoE can cut interest rates again this year.
“Uncertainty around potential tax rises in the upcoming budget has added to the caution. A handful of lenders have nudged rates higher over the past week, but it is too early to say if this marks the start of a sustained move upward. The next few weeks of data will be crucial.”
ENCOURAGING INCREASE
Ben Allkins, head of mortgages and protection at Just Mortgages, says: “While net borrowing slowed in July, it’s encouraging to see another monthly increase in mortgage approvals, albeit only marginal again.
“There’s no question that July marked the usual start of a quieter summer season, although positive movement from lenders in anticipation of the August base rate cut certainly gave brokers a great headline to proactively share with clients and encourage activity.
“While perhaps not at full steam, we still saw high levels of business activity across all areas of Just Mortgages, with strong demand for valuation requests, buyer registrations and mortgage appointments.
“Another increase in consumer credit borrowing is certainly something to take note of, particularly for advisers and the pressures still being felt by many borrowers. The great news is that options exist to support all types of borrowers – it’s up to us to remind our clients and local community of this and the knowledge and expertise brokers can offer to help navigate the market.”
IMPROVE TRANSACTION PROCESS
Simon Wright, Chief Operating Officer at PEXA, said: “Easing interest rates and a spate of new products from lenders, from family-backed mortgages to 0% deposits, will likely have increased approvals.
“This undoubtedly will be strongly welcomed by an industry that has hoped for a more favourable outlook for years and has been put at the heart of the economy.
“If we’re going to maintain this momentum, there is still a larger issue that needs to be addressed – the transaction process itself.
“As demand for mortgages increase and measures to help improve affordability start to have an impact, we will place unprecedented strain on conveyancers to get transactions over the line when they are already at their maximum capacity.
“There needs to be greater attention placed on reforming the back-end infrastructure that supports the process to overcome this, delivering a more certain, secure and streamlined process for buyers at the same time.
“We need strong investment in technology that innovates the UK property market, otherwise this will be very short-lived.”
