While borrowing levels have been increasing thanks to low mortgage rates on offer, many changes are on the horizon.

Figures released by the Bank of England this week showed mortgage approvals have increased to the highest level since January 2014. However further regulation, an increasing base rate and wider economic uncertainty could all slow down this progress.

Charles Haresnape, chairman of the Intermediary Mortgage Lenders Association trade body, said the market was currently performing well.

“While May was a weak month for mortgage approvals, it’s promising to see the post-election rebound continue into July, which saw the highest number of approvals since the introduction of the Mortgage Market Review last year,” he said.

“With 7% more approvals compared with the six-month average, it is a clear indication that health is returning to a market that has been under significantly pressure to perform while adjusting to new working practices.”

However, he said that lenders faced many challenges in the coming months which could affect the market

“With the additional layer of the European Mortgage Credit Directive (MCD) rules begins to come into effect this month, there is likely to be an extra element of uncertainty and instability ahead for the market. Even in the face of China’s rattling stock market, it may also be premature to rule out a base rate rise in the near future, which is likely to weigh down on consumer borrowing as well.”

“On the positive side, rising approvals suggest consumer appetite is strong and lenders will also be striving to meet their end of year targets, which should support some competitive deals. We must hope that the impacts of change do not weigh down too heavily on what otherwise looks like a strengthening market recovery.”