Mortgage borrowing in the UK has more than doubled, jumping from £1.3 billion in May to £2.7 billion in June, offering a glimmer of hope to homebuyers. Could this signal a rate cut is on the horizon?

The Bank of England’s latest report shows the annual growth rate for net mortgage lending is also on the rise, reaching 0.5% last month, up from 0.3% in May.

Approvals and Remortgaging

While the number of mortgage approvals for house purchases remained steady at 60,000 in June, remortgaging approvals dipped to 27,500 from 29,300 in May. This suggests homeowners may be hesitant to switch lenders in the current climate.

Experts Predict Rate Cut

The Bank of England’s Monetary Policy Committee is due to meet on Thursday to decide on the base rate, and many economists are predicting a cut from the current 16-year high of 5.25%. This anticipation has already led several lenders to reduce their mortgage rates in recent weeks.

Mark Harris, chief executive of SPF Private Clients, believes an interest rate cut is highly probable and will provide a much-needed boost to the market.

He says: “With inflation sticking at its 2% target, an interest rate cut is increasingly likely, with some expecting it to come on Thursday. When it does happen, it will give the market a welcome boost and lenders more confidence to price their mortgage rates lower.”

Confidence Returning to the Market?

Jonathan Samuels, chief executive of Octane Capital, notes a rise in buyer activity since the general election. He expects this upward trend to continue, especially with the possibility of an interest rate cut.

Adding to the optimism, Tom Cuppello, director of risk at Broadstone, points to the increase in mortgage borrowing as a sign of returning confidence in the property market.

He comments: “Mortgage borrowing reached its highest level in over 18 months in June 2024, more than doubling from the previous month’s total as confidence appears to be returning to the property market.”

All eyes are now on the Bank of England’s announcement on Thursday. If they do decide to cut rates, it could be the news that both buyers and sellers have been waiting for.