A slight increase in mortgage approvals
June brought a modest increase in mortgage approvals, according to the Bank of England. The number climbed from 56,565 in May to 58,200 last month. Despite the gain, the figure remained below the six-month average of 61,400 and below the recent high seen in April, which was 65,900.
Net mortgage borrowing rose sharply to £7.7bn in June, the highest since March 2025. This contrasts with May's figure of £3.3bn and the six-month average of £4.9bn. However, some experts argue this is not a sign of a strong comeback by the housing market.
Expectations of higher interest rates cast doubt
Nathan Emerson, CEO of Propertymark, said the housing market may still be struggling to return to historical trends. Matt Swannell, an economic adviser, warned that renewed tensions between the US and Iran, alongside rising energy prices, have led to expectations of higher interest rates. Such expectations could cause the market to lose the ground gained in June.
Swannell said elevated mortgage rates are likely to keep affordability challenges on the table. With lending activity appearing to rise, some analysts believe it reflects a wave of early action from homebuyers who locked in rates before prices increased in late February.
Interest rates and economic signs
Paul Dales, a UK economist, also pointed out that June's £7.7bn lending total doesn't signal a full return to normal market behavior. He said the rise is more likely a result of delayed completions and not a sign of strength. Dales also noted a five percent increase in money supply in June, which supports expectations of a rate hold from the Bank of England.
Despite inflation concerns, notably from oil and gas disruptions in the Strait of Hormuz, some major firms including UBS still expect rates to remain at 3.75 percent through the end of 2025. Official inflation data for June showed a drop to 2.6 percent, down from 2.8 percent in May, though forecasts suggest it could rise again to 3.8 percent.