UK Mortgage Lending Defies Interest Rate Hike with June Surge

Mortgage lending in the UK saw an unexpected surge in June despite rising interest rates, according to data from the central bank. The net borrowing of mortgage debt jumped to £7.7 billion, up from £3.3 billion in May, and the number of mortgage approvals for home purchases rose to 58,200.

This increase comes as a surprise given the ongoing conflict in the Middle East and its impact on inflation, which has led to higher interest rates. The average two-year fixed residential mortgage rate sat at 5.62%, while the five-year rate stood at 5.66%.

Nathan Emerson, chief executive of Propertymark, suggested that the modest rise in mortgage approvals could indicate some economic stability following recent Bank of England decisions to hold interest rates steady at 3.75%. However, he noted that approvals remained below the average recorded over the previous six months, indicating that activity has yet to fully recover.

The central bank's data also showed an increase in net borrowing of consumer credit to £1.8 billion from £1.7 billion in May, with credit card lending being a key driver of this growth. However, other forms of consumer credit, such as car loans and personal loans, decreased.