July was a rollercoaster of highs and lows for the housing market, beginning with a big base rate increase from the Bank of England, but ending on a much more positive note. Here’s what you need to know about house prices, interest rates and mortgage lending this month.


The future looks brighter for interest rates

Since our last market update, the base rate has increased to 5.25%. The great news this month is that inflation is finally starting to fall faster than expected – it dropped from 8.7% to 7.9% in June, mostly driven by falling food and fuel prices.¹ Although inflation is still well above the Bank of England’s 2% target, the picture is much more positive than last month, when inflation didn’t fall at all.

Markets are now forecasting a peak that’s less extreme than initially predicted.² Swap rates, which mortgage rates are based on, are also falling – a positive indicator that rate increases could be coming to an end. Several high street lenders like HSBC have already started to reduce their own mortgage rates in anticipation. 

If your current mortgage deal is coming to an end in the next 6 months, now could be a great time to explore your remortgage options. The expert brokers at Moneybox Mortgages can help you find the right mortgage for you from over 90 lenders, then lock in a rate. Head in-app to Accounts > Mortgages to chat to them.


House prices stay put at current levels

There’s not a lot to report on house price inflation this month, which is interesting in itself. The UK House Price Index, which covers all sold transactions registered on the Land Registry, reported a 0% change in house price growth between April and May 2023. While house prices are not crashing, growth is slowing down, as buyer demand has been impacted by the higher cost of living and mortgage rates.

For sellers, the current challenge is finding a buyer who is happy to go ahead with interest rates at their current levels. For buyers, it’s a great opportunity to find a discounted home, as long as they can afford the mortgage repayments. We’re still helping thousands of people buy homes each month, so chat to us and see how we could help you.


Mortgage lending levels defy expectations again

Mortgage approvals for house purchases beat the forecasts for a second consecutive month. The number of mortgage applications approved by lenders increased unexpectedly from 50,000 in May to 54,000 in June – significantly higher than the 47,000 predicted.³ Approvals have also bounced back considerably since January, signalling that lending levels are hopefully returning to normal. 


Closing thoughts

With inflation figures moving in the right direction, the outlook for interest rates is positive, and we’re hopeful that this marks the start of a return to relative normality. If you’re viewing properties or due to remortgage soon, it’s worth starting the conversation early and beginning to look for a mortgage deal now. That way, if rates fall, you’ll be well placed to apply when the time is right for you.


¹ Source: Office of National Statistics (ONS) CPI Annual Rate of Inflation

² Source: GOV.UK Land Registry (UK House Price Index for May 2023).

³ Source: Trading Economics, UK Mortgage Approvals for June 2023 

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