According to the Bank of England’s (BoE) money and credit statistics, that latest data showed that mortgage approvals, an indicator for future borrowing, grew from 49,000 in April to 50,000 in May.

Approvals for remortgages rose from 32,500 in April to 33,600 in May.

The BoE said that the effective interest rate for newly drawn mortgage rose by 10 basis points to 4.56% in May.

The rate on outstanding stock increased by seven basis points to 2.82% in May.

The report added that gross repayments increased slightly from £18.6bn to £18.9bn after three consecutive months of decreases.

The report continued that individuals repaid, a net figure of £100m of mortgage debt in May.

Affordability is ‘key challenge’

Steve Seal, CEO, Bluestone Mortgages, said that while today’s figures show an uptick in mortgage approvals, it did not account for the BoE’s recent increase in the base rate to five per cent.

“However, as inflation continues at higher-than-expected levels, so too will the financial pain for those looking to take their first or next steps onto the property ladder. With the average two-year fix now above six per cent and the cost of living likely to remain high for the foreseeable future, affordability is the key challenge facing consumers,” he noted.

Seal continued that borrowers who were struggling should seek guidance, and it was the “duty of our industry and at the heart of what we do to support homeowners and buyers by signposting them to the help available as well as innovating to meet their evolving needs”.

Market conditions are ‘erratic at best’

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said that the figures were a “useful indicator of future direction of travel for the housing market and the signs are perhaps not as bad as we may have feared”.

He noted: “However, the figures probably reflect decision-making from a few months ago at least so will not include much of the turmoil that followed the recent increase in mortgage rates.

“Nevertheless, we are still finding a determination to get sales done even if they are taking longer and the market is more price-sensitive. This is resulting in some heavy negotiations.”

Jonathan Samuels, CEO of Octane Capital, continued that current market conditions were “erratic at best” and there had been “unpredictable monthly movement with regard to the level of mortgages being approved so far this year”.

He added: “This is largely due to the Bank of England’s decision to keep increasing interest rates, with buyers having to reassess their position in the market, only to return to find the goal posts have moved once again,” he explained.

Samuels continued that this had led the number of approvals month to month going “up and down like a yo-yo”.

“This demonstrates the tricky landscape buyers are attempting to negotiate in order to climb the ladder,” he added.