The number of mortgages being approved to home buyers ticked up in May, marking the first month-on-month increase this year so far, according to Bank of England figures.
Around 63,000 mortgages were approved for house purchase in May, which was around 2,400 more than in April.
The Bank’s Money and Credit report said: “This was the first increase since December 2024. Approvals for remortgaging (which only capture remortgaging with a different lender) also increased in May, by 6,200 to 41,500. This is the largest increase since February 2024.”
Stamp duty discounts became less generous for some home buyers from April. Stamp duty applies in England and Northern Ireland.
But several lenders have recently made changes to their mortgage affordability assessments, enabling some people to potentially borrow more, following clarification from the Financial Conduct Authority (FCA).
Andrew Montlake, chief executive at mortgage broker Coreco, described the uplift in home buyer mortgage approvals as “a welcome breath of air”.
He said: “A lot of activity this year to date has been skewed by the stamp duty deadline in April, but that is now in the rear-view mirror and this points to growing confidence among borrowers and a realisation that the new norm is here to stay, at least for now.
“Demand for mortgages is still there, even though rates appear to have stabilised for now. We’ve seen a lot of lender innovation around affordability in recent months and that may be starting to feed through into this data.
“It’s a market delicately balanced on sentiment and affordability but if lenders continue to price competitively and inflation holds its ground, we may just see these green shoots become more sustainable.”
Richard Donnell, executive director at Zoopla, said a rise in the number of home sales agreed “has boosted the demand for mortgages from home buyers.
“More homes for sale means more buyers and sales. We expect demand for mortgages to continue to increase as more sales are agreed. The market remains on track for five per cent more sales in 2025.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Remortgaging numbers jumped by 6,200 in the month, suggesting that borrowers are keen to shop around for better deals even if it means the hassle of applying to another lender.”
Looking at non-mortgage borrowing, the annual growth rate for consumer credit slowed to 6.5 per cent in May, from 6.7 per cent in April.
Within the figure, the annual growth rate for credit card borrowing eased to 9.2 per cent from 9.9 per cent, over the same period.
Households’ deposits with banks and building societies increased by £4.3 billion in May, following net deposits of £2.8 billion in April. The increase was partly driven by households depositing an additional £3.9 billion into Isas.
Mark Hicks, head of active savings, Hargreaves Lansdown, said: “Savers are continuing to squirrel money away at impressive rates, and cash Isas are still dominating the picture.
“May is always going to see less flowing into cash Isas than the first month of the new tax year, but with another £3.9 billion being saved into cash Isas in May, the appeal of tax-free savings is clearly still a massive draw.”
In May, UK non-financial businesses borrowed, on net, £8.6 billion of loans from banks and building societies, including overdrafts, following £1.2 billion of net borrowing in April.
This was the biggest amount of net borrowing since April 2020, when £15.9 billion was recorded, the Bank said.
Within this, big non-financial businesses borrowed, on net, £8.2 billion, compared to £1.3 billion of net borrowing in April.
Small and medium-sized non-financial businesses (SMEs) borrowed, on net, £0.4 billion, compared to flat net borrowing in April.
The annual growth rate of borrowing by large businesses increased to 8.4 per cent in May from 5.9 per cent in April, and was the highest since September 2022 (9.1 per cent).
