British mortgage approvals ticked higher in June, offering a modest sign of resilience in the UK housing market even as households continue to navigate elevated borrowing costs and ongoing political turbulence, according to fresh data released by the Bank of England.
A Bounce Back From a Two-Year Low
The number of home loans approved by banks and building societies rose to 58,200 in June, according to Bank of England figures published Wednesday. That marked a meaningful rebound from May, when approvals had plunged to their lowest level in more than two years. The June reading also comfortably beat economist expectations, with a Bloomberg survey having pointed to a more modest rise to around 57,100. Still, despite the improvement, June’s approval figure remained below the running six-month average of roughly 61,400, underscoring that the broader recovery in mortgage activity remains incomplete.
Remortgaging Also Picks Up
Beyond new home purchase approvals, the data also showed a pickup in remortgaging activity, with approvals for switching to a new lender’s deal rising to 34,200 in June, up from 33,800 in May. Net borrowing of mortgage debt by individuals climbed sharply as well, increasing to £7.7 billion in June from £3.3 billion in May, suggesting that households who did commit to new borrowing did so in somewhat larger amounts than the month before.
Consumer Credit Growth Continues, But Concerns Simmer
Consumer credit growth also ticked up modestly in June, with net borrowing rising slightly to £1.8 billion, broadly in line with the six-month average. Borrowing through credit cards accounted for £0.9 billion of that total, matched by an equivalent £0.9 billion in other forms of consumer credit. On an annual basis, overall consumer credit growth edged up to 9.1% in June, a slight acceleration from 9.0% in May.
While steady consumer credit growth might typically be read as a sign of confident household spending, the picture is complicated by a separate Bank of England survey showing a marked deterioration in loan performance. According to that survey, the share of lenders reporting rising default rates over the previous three months outnumbered those reporting declines by 34 percentage points, a sharp jump from around 18 percentage points in the first quarter and the highest such reading since 2009. That signal suggests growing stress among borrowers even as headline lending activity has shown tentative signs of stabilizing.
Context: A Volatile Year for UK Housing
June’s modest recovery follows a choppy first half of 2026 for the UK mortgage market. Approvals fell to a two-year low of 59,999 in January before rebounding to 62,600 in February, only to weaken again in subsequent months as elevated borrowing costs, linked in part to broader geopolitical instability including the conflict involving Iran, weighed on buyer sentiment. Effective interest rates on newly drawn mortgages have hovered in the 4.1% to 4.2% range throughout the year, keeping monthly repayment costs elevated relative to the ultra-low rate environment that prevailed for much of the previous decade.
What the Data Signals
Economists note that mortgage approvals are a closely watched leading indicator of future housing market activity, since they reflect lenders’ formal offers of credit before a purchase is finalized. The June rebound suggests that some of the paralysis seen in the housing market during May has eased, potentially as buyers adjust to the current interest rate environment or take advantage of increased competition between lenders. However, with approvals still running below their six-month average and default rate concerns climbing to their highest level in well over a decade, the underlying health of the UK’s housing and consumer credit markets remains far from fully settled.
Looking Ahead
With the Bank of England continuing to weigh the pace of future interest rate adjustments against a backdrop of persistent inflation concerns and global economic uncertainty, the trajectory of mortgage approvals in the coming months will offer an important signal of whether June’s rebound represents the start of a durable recovery or merely a temporary pause in an otherwise cooling housing market.
