Rise in number of mortgage approvals to home buyers in May, says Bank of England
The Bank's Money and Credit report said: 'This was the first increase since December 2024. Approvals for remortgaging (which only capture remortgaging with a different lender) also increased in May, by 6,200 to 41,500. This is the largest increase since February 2024.'
Stamp duty discounts became less generous for some home buyers from April. Stamp duty applies in England and Northern Ireland.
But several lenders have recently made changes to their mortgage affordability assessments, enabling some people to potentially borrow more, following clarification from the Financial Conduct Authority (FCA).
Andrew Montlake, chief executive at mortgage broker Coreco, described the uplift in home buyer mortgage approvals as 'a welcome breath of air'.
He said: 'A lot of activity this year to date has been skewed by the stamp duty deadline in April, but that is now in the rear-view mirror and this points to growing confidence among borrowers and a realisation that the new norm is here to stay, at least for now.
'Demand for mortgages is still there, even though rates appear to have stabilised for now. We've seen a lot of lender innovation around affordability in recent months and that may be starting to feed through into this data.
'It's a market delicately balanced on sentiment and affordability but if lenders continue to price competitively and inflation holds its ground, we may just see these green shoots become more sustainable.'
Richard Donnell, executive director at Zoopla, said a rise in the number of home sales agreed 'has boosted the demand for mortgages from home buyers.
'More homes for sale means more buyers and sales. We expect demand for mortgages to continue to increase as more sales are agreed. The market remains on track for 5% more sales in 2025.'
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: 'Remortgaging numbers jumped by 6,200 in the month, suggesting that borrowers are keen to shop around for better deals even if it means the hassle of applying to another lender.'
Looking at non-mortgage borrowing, the annual growth rate for consumer credit slowed to 6.5% in May, from 6.7% in April.
Within the figure, the annual growth rate for credit card borrowing eased to 9.2% from 9.9%, over the same period.
Households' deposits with banks and building societies increased by £4.3 billion in May, following net deposits of £2.8 billion in April. The increase was partly driven by households depositing an additional £3.9 billion into Isas.
Mark Hicks, head of active savings, Hargreaves Lansdown, said: 'Savers are continuing to squirrel money away at impressive rates, and cash Isas are still dominating the picture.
'May is always going to see less flowing into cash Isas than the first month of the new tax year, but with another £3.9 billion being saved into cash Isas in May, the appeal of tax-free savings is clearly still a massive draw.'
In May, UK non-financial businesses borrowed, on net, £8.6 billion of loans from banks and building societies, including overdrafts, following £1.2 billion of net borrowing in April.
This was the biggest amount of net borrowing since April 2020, when £15.9 billion was recorded, the Bank said.
Within this, big non-financial businesses borrowed, on net, £8.2 billion, compared to £1.3 billion of net borrowing in April.
Small and medium-sized non-financial businesses (SMEs) borrowed, on net, £0.4 billion, compared to flat net borrowing in April.
The annual growth rate of borrowing by large businesses increased to 8.4% in May from 5.9% in April, and was the highest since September 2022 (9.1%).
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
2 hours ago
- Reuters
Australia August consumer sentiment boosted by rate cuts
SYDNEY, Aug 19 (Reuters) - A measure of Australian consumer sentiment improved sharply in August as the third cut in interest rates this year bolstered the outlook for finances and the economy, a survey showed on Tuesday. A Westpac-Melbourne Institute survey showed its main index of consumer sentiment climbed 5.7% in July to 98.5, the highest reading since early 2022. The reading under 100 means pessimists still outnumber optimists, though only just. The pick-up came after the Reserve Bank of Australia cut interest rates a quarter point to 3.60% and left the door open to further easing this year. "That looks to have reinforced consumer expectations that mortgage interest rates are headed lower, giving a broad-based boost to sentiment," said Matthew Hassan, Westpac's head of Australian macro-forecasting. The improvement was broad based across the survey's measures of confidence, with the index of the economic outlook for the next year jumping 7.6% while that for five years rose 5.4%. Family finances compared to a year ago bounced 6.2%, and the outlook for the next 12 months picked up by 5.4%. In a promising note for retailers, the index of whether it was a good time to buy a major household item gained 4.2%. The survey's measure of whether it was a good time to buy a dwelling climbed 10.5% to a four-year high of 97.8, though that remains below the long-run average of 120 due to affordability constraints.
Reuters
13 hours ago
- Reuters
Canadian dollar steadies ahead of domestic inflation data
TORONTO, Aug 18 (Reuters) - The Canadian dollar was barely changed against its U.S. counterpart on Monday as oil prices rose and investors awaited domestic inflation data that could guide expectations for the Bank of Canada policy outlook. The loonie was trading nearly unchanged at 1.3814 per U.S. dollar, or 72.39 U.S. cents, after moving in a range of 1.3784 to 1.3831. Canada's consumer price index report for July is due on Tuesday. Economists expect the annual rate of increase in consumer prices to ease to 1.8% from 1.9% in June, but measures of underlying inflation that are closely tracked by the BoC are forecast to remain well above the central bank's 2% target. "Tomorrow's Canadian inflation report should remain too hot for comfort," Karl Schamotta, chief market strategist at Corpay, said in a note. "The central bank's preferred trim and median core measures are likely to hold close to the 3% threshold for now as retaliatory tariffs and still-resilient consumer spending levels translate into upward pressure on prices." Investors see a 68% chance that the BoC would leave interest rates unchanged at its next policy decision on September 17. The central bank has been on hold since lowering the benchmark rate to 2.75% in March. The price of oil , one of Canada's major exports, was up 0.5% at $63.11 a barrel, while the U.S. dollar (.DXY), opens new tab notched gains against a basket of major currencies. Canadian housing starts unexpectedly rose in July, advancing 4% from the previous month, data from the national housing agency showed. Data on Friday from the U.S. Commodity Futures Trading Commission showed that speculators have raised their bearish bets on the Canadian dollar to the highest level since June. The Canadian 10-year yield was up 2.7 basis points at 3.489%, after earlier touching its highest level since July 30 at 3.506%.
Reuters
14 hours ago
- Reuters
Norway wealth fund excludes six Israeli companies linked to West Bank, Gaza
OSLO/COPENHAGEN, Aug 18 (Reuters) - Norway's sovereign wealth fund, the world's largest, will exclude another six Israeli companies with connections to the West Bank and Gaza from its portfolio following an ethics review, it said on Monday. The $2 trillion wealth fund did not name the companies it had decided to exclude but said they would be made public, along with specific reasons, once the divestments were completed. One possibility is they include Israel's five largest banks, which have been under review by the fund's ethical watchdog. Separately, the fund said it had also sold stakes in six other companies following a decision last week to only hold stakes in Israeli companies that are part of the fund's benchmark index. As of August 14, the fund had 19 billion crowns ($1.86 billion) invested in 38 companies listed in Israel, the fund's operator Norges Bank Investment Management said, a reduction of 23 companies since June 30. "More companies could be excluded," Norwegian Finance Minister Jens Stoltenberg told reporters. The fund launched an urgent review earlier this month after reports that it had built a stake in an Israeli jet engine group that provides services to Israel's armed forces, including the maintenance of fighter jets. The reports spurred a fresh debate about the fund's investments in Israel and the occupied Palestinian territories ahead of elections on Sept. 8, with some parties calling for the fund to divest from all Israeli companies, a step the government has ruled out. Norway's parliament in June rejected a proposal for the fund to divest from all companies with activities in the occupied Palestinian territories. "This debate helps sharpen our practices," said Stoltenberg. Critics say only a complete withdrawal from investing in Israeli companies would protect the fund against possible ethical breaches. Stoltenberg said that, from now on, the ethics watchdog and NBIM would have more frequent and faster exchanges of information to more rapidly identify problematic companies. Ethical exclusions from the fund are based on recommendations from the fund's watchdog, though NBIM can also divest from companies if it assesses that a company poses too much of a risk to the fund, whether the risk is ethical or not. "With more exchanges of information between the Council on Ethics and Norges Bank, it is possible that there could be more divestments of that kind in future," said Stoltenberg. Last Monday, the fund announced it was terminating contracts with all three external asset managers who handled some of its Israeli investments. ($1 = 10.1890 Norwegian crowns)
