Mortgage approvals rose to 50,500 in May from 49,000 in April, figures released from the Bank of England showed, marginally better than the City had predicted.
Remortgage approvals also rose from 32,500 to 33,600 during the same period while the 'effective’ interest rate - the actual interest rate paid – on newly drawn mortgages rose by 10 basis points, to 4.56% in May.
Net borrowing on consumer credit by individuals decreased from £1.5bn in April to £1.1bn in May.
The figures for May came ahead of the increase in interest rates to 5% announced by the Bank of England last week which prompted lenders to hike mortgage rates across the board.
Martin Beck, chief economic advisor to the EY ITEM Club, thinks May's rise in mortgage approvals "may prove the high point for the immediate future."
He pointed out despite the improved figure mortgage approvals are still down 24% on a year earlier.
“Mortgage interest rates have risen significantly during June, driven upwards by the increase in swap rates."
"This has caused a significant deterioration in mortgage affordability and is likely to keep housing activity at very low levels," Beck felt.
Backing up the ticking time bomb in the mortgage market, the average two-year fixed mortgage rate jumped to 6.37% today, while five-year fixes got ever-closer to 6%.
Figures from Moneyfacts show that two-year fixed rates were up from 6.30%. Five-year rates rose from 5.91% to 5.94%.