Mortgage approvals push higher in May - BoE
By Abigail Townsend
Date: Monday 30 Jun 2025
(Sharecast News) - UK mortgage approvals nudged higher in May, official data showed on Monday, beating expectations.
According to the latest monthly Money and Credit report from the Bank of England, net mortgage approvals were 63,032 last month. That was a 2,376 increase on April, and higher than forecasts for 59,750.
Net borrowing of mortgage debt was also higher. It rose £2.8bn to £2.1bn, following April's £13.8bn slump. The slide had been prompted by buyers rushing to complete in March ahead of changes to stamp duty thresholds.
The effective interest rate - the actual interest paid - on newly drawn mortgages decreased marginally in May to 4.47% from 4.49%.
Matt Swannell, chief economic advisor to the EY Item Club, said: "An easing in stamp duty distortions and a fall in quoted mortgage rates supported stronger mortgage activity in May.
"Now that volatility has started to ease, the fundamental drivers of mortgage demand should reassert themselves. Mortgage rates are now much lower than they have been for most of the past three years, while nominal earnings growth has been strong.
"Together, these forces mean affordability is much less stretched than it has been in the recent past."
The BoE's monthly report also showed that net borrowing of consumer credit by individuals had decreased by £1bn to £0.9bn in May.
Within that, net borrowing through credit cards fell sharply, to £0.1bn from £1.2bn, while other forms of consumer credit - such as personal loans and car finance - eased to £0.7bn from £0.8bn.
In contrast, household deposits with banks and building societies increased by £4.3bn, following net deposits of £2.8bn in April.
Swannell added: "Consumes have exercised extreme caution in recent years, and whether this continues is a key uncertainty around the consumer outlook.
"Surveys suggest consumer sentiment is gradually ticking up, and we expect this to mean households will be keen to spend a little more this year and next. This should help to cushion some of the headwinds from softer real income growth, tighter fiscal policy and the lagged impact of past interest rate rises on mortgages."
The BoE has trimmed the cost of borrowing twice this year, to 4.25%. Most analysts agree that the Monetary Policy Committee will cut again when it next meets in August.
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