UK mortgage approvals dip in May

UK mortgage approvals dipped in May as higher mortgage rates continued to take their toll, according to data released on Monday by the Bank of England.

Net mortgage approvals for house purchases edged down to 60,000 from 60,800 in April. Economists were expecting a figure of 59,900.

Meanwhile, approvals for remortgaging came in at 29,600, down from 29,900.

Figures also showed that consumer borrowing came in at £1.5bn in May, up from £800m in April.

Peter Arnold, EY UK chief economist, said: "The strong recovery in mortgage demand seen in the early part of the year has petered out of late, in keeping with the rise in quoted mortgage rates over the past few months. Net secured lending also fell to £1.2bn from £2.2bn in April, although that was due to a significant rise in repayments. Gross lending continued to increase, reflecting the pickup in approvals at the start of the year.

"Swap rates have remained broadly stable over the past couple of months, and they should remain close to these levels if - as the EY ITEM Club expects - the Monetary Policy Committee (MPC) begins gradually cutting interest rates from August. This, in turn, points to quoted mortgage rates remaining close to current levels, so the relative stability in mortgage demand should also continue."