Estimated gross mortgage lending for the total market reached £23.bn in June, 2.1 per cent up on the same month in 2017, the latest UK Finance data has found.
Despite the upturn in volumes lent, the number of mortgage approvals granted by high street banks across remortgage, house purchase and other secured lending fell by 2.1 per cent in June.
The trade body says that only remortgage approvals increased up 3.4 per cent than the same month last year.
This was offset by a 4.7 per cent drop in approvals for house purchase and a 4.3 per cent drop in other secured borrowing.
UK Finance personal finance managing director Eric Leenders says: “Growth in mortgage lending continues to be driven by remortgaging, as borrowers take advantage of attractive deals ahead of an anticipated Bank rate rise.”
In its economic update for July, UKF says: “The UK economy is growing at its slowest pace in more than five years, marked by weaker manufacturing and construction growth. Consumer-facing industries have also lagged, as average store prices increased, keeping inflation higher than pay growth.
“Despite that high levels of employment and low-level interest rates have kept consumer confidence more upbeat, consumers still remain wary of their day-to-day finances and propensity to shop, as the real value of earnings continues to decline. In addition, the latest figures on the household savings ratio point to a rundown of household savings to their lowest level, which is indicative of the increased borrowing by households throughout 2017.
“The outlook for inflation and real earnings growth will be closely monitored over the coming months ahead of the next MPC’s assessment of economy and interest rate decision.”
Of the mortgage figures, Foundation Home Loans director of marketing Jeff Knight says: “Predictions for an August rate rise may have dampened slightly, with inflation stalling and house prices rising at the slowest pace for five years last month. Where this might impact those who were hopeful to bag competitive mortgage deals before the rise, activity from homeowners remortgaging should help maintain overall market activity.
“With lenders offering borrowers more choice, it is clear the changing demands of the market are being met, reflecting the tendency to browse offers before opting in. We are continuing to see specialist cases take up a larger portion of the market, proving demand from buyers persists, in spite of any political or economic uncertainty.”