Mortgage borrowing has reached its highest level in nearly two years, fueled by recent interest rate cuts. The Bank of England reported 62,000 mortgage approvals in July, the most since September 2022, indicating that many prospective buyers were waiting for better rates before entering the market. After a challenging period marked by rapidly rising borrowing costs due to last year’s mini-budget fallout, the recent rate cut—the first in four years—has restored buyer confidence, making home purchases more attainable. Although current mortgage rates, averaging 4.81%, are still higher than pre-pandemic lows, they have dropped significantly from the recent peaks, enabling more buyers to move forward.

Confidence Grows Across Borrowing Sectors
The Bank’s data shows growing confidence not only in mortgage borrowing but across other lending areas as well. Credit card debt has climbed, possibly driven by increased spending on holidays and summer activities. However, the cost of borrowing on credit cards and overdrafts has also risen, with interest rates now at 21.28% and 22.56%, respectively. At the same time, house prices are climbing at the fastest annual rate seen in nearly two years, reflecting optimism for cheaper borrowing options in the future, despite some areas facing higher borrowing costs.

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