UK mortgage approvals edged down in May as higher mortgage rates continued to take their toll, according to the latest figures released yesterday by the Bank of England.

Net mortgage approvals for house purchases dipped to 60,000 from 60,800 in April, which is slightly higher than the 59,900 figure economists were expecting.

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.

Lucian Cook, head of residential research at Savills, commented: “While house prices in June, and mortgage approvals in May, held firm, the effect of a general election on short term buyer commitment was more readily reflected in the number of new deals being agreed in the market.

“Transaction had been 8% above the pre pandemic norm in the preceding three months but fell to 8% below that benchmark in June; coming in at 82,000 according to data from Twenty CI. Similarly, the number of properties being bought to the market came in slightly below the pre-pandemic average (-1%, having been +6% in the period from March to May).

“However, with a base rate cut in the offing we would expect activity levels to bounce back in coming months, especially as the impact that an easing of mortgage rates could have will no longer be tempered by political uncertainty come the autumn.”

Jeremy Leaf, north London estate agent, said: “We are not really surprised that mortgage approvals are down a bit this month. In our offices, sales agreed numbers are still good as buyers and sellers shrug off concerns about the election but more importantly perhaps valuation appraisals and listings are on the up, which has meant prices are softening a little.

“Approvals are always a very good indicator of demand in the recent past and near-term transactions to come.

“Certainly we are seeing no signs of withdrawals or heavy negotiations so expect more of the sane or even slightly better as hopefully mortgage rates start to drop over the next quarter.”

Tom Bill, head of UK residential research at Knight Frank, added: “Mortgage rates drifted higher over the first six months of the year as stubborn services inflation meant the prospect of the first rate cut since March 2020 has become more remote. Together with uncertainty surrounding the general election, that has kept a lid on the seasonal rise in trading activity this spring.

“We expect transaction volumes to rise in the second half of this year as a rate cut becomes imminent and more political stability returns to Westminster.”

Major lenders cut mortgage rates ahead of an expected Labour victory this week