UK mortgage approvals rise as buyers return after tax hike
The housing market nonetheless faces headwinds from a slowing economy and anxiety about the outlook, while surveys show an abundance of properties for sale is weighing on prices
[LONDON] The number of UK home loans given the green light rose to a three-month high in June, as the housing market continued to shake off the impact of April’s tax hike.
Mortgage approvals climbed to 64,167, up from 63,288 in May, Bank of England (BOE) data showed on Tuesday (Jul 29). It was better than the 63,100 expected by economists surveyed by Bloomberg. Net mortgage lending, which reflects approvals granted in previous months, more than doubled to £5.3 billion (S$9.1 billion) .
It adds to evidence that demand is steadying after being rocked by an increase in property taxes, which fuelled a spurt of buying before it took effect in April and a slowdown afterwards. The housing market nonetheless faces headwinds from a slowing economy and anxiety about the outlook, while surveys show an abundance of properties for sale is weighing on prices.
“Secured lending activity continued to recover in June, as the impact of April’s change in stamp duty thresholds continued to fade,” said Matt Swannell, chief economic advisor to the EY ITEM Club.
“Stepping back from the policy-induced volatility, the outlook for housing market activity remains relatively subdued,” he added. “Interest rates are expected to fall further this year and into next. However, despite some progress in recent years, most housing and mortgage affordability metrics remain stretched, so the recovery in activity and prices will likely be gradual in the second half of 2025 and into 2026.”
The BOE data also showed that unsecured lending to consumers rose £1.4 billion in June, bouncing back from May when it slumped below £1 billion for the first time this year. It was stronger than the £1.2 billion economists forecast, with the increase driven by a sharp pickup in credit card borrowing.
However, a jump in the amount of cash households deposited in bank and building society accounts to £7.8 billion last month suggests consumers remain cautious with a continuing preference to save rather than spend.
The figure, which was well above the six-month average of £5.6 billion, was driven by households depositing an additional £3.6 billion into tax-free Individual Savings Accounts and £1.2 billion into interest-bearing sight accounts, the BOE said. BLOOMBERG
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