Individuals across the UK borrowed a net £5.3bn of mortgage debt in August, new figures published by the Bank of England (BoE) have revealed.

The Bank highlighted that this follows the “rare” net repayment of £1.8bn in July.

According to the figures, the net borrowing in August was £1.4bn below the 12-month average to June 2021, when the stamp duty holiday was in full effect. August also saw gross lending bounce back to £21.5bn, up from £16.6bn in July, while gross repayments fell a little to £17.6bn.

The BoE also revealed that approvals for house purchases, which is an indicator of future borrowing, fell marginally in August to 74,500, down from 75,100 in July. This is the lowest monthly total since July 2020 but remains above pre-February 2020 levels.

Approvals for remortgaging, which only capture remortgaging with a different lender, increased to 39,700 in August. The Bank confirmed that this remains low compared to the months running up to February 2020, but is the highest since March 2020.

Hope Capital CEO, Jonathan Sealey, commented: “It was to be expected the level of borrowing would not compete with the record borrowing in June, which was undoubtedly owing to the opportunities created by the stamp duty holiday.

“After the rush to meet the deadline, it was obvious we were going to see a more sustainable level of activity in the aftermath. However, moving forward, it is crucial the desire to buy properties does not flake.

“Today’s Bank of England statistics also reveal that while mortgage approvals for house purchase were down on recent high levels, they were still 12% higher than pre-pandemic average, which is reassuring.

“Ultimately, the availability of competitive rates, high LTV’s and innovative solutions, will undoubtedly be the driver in ensuring there are plenty of opportunities to be seized by borrowers, now we begin to approach the end of 2021.”

The BoE’s latest figures also revealed that individuals across the UK borrowed £0.4bn in consumer credit in August. Within this figure, they borrowed an additional £0.2bn in credit card debt, and another £0.2bn of ‘other’ forms of consumer credit such as car dealership finance and personal loans.

On average, £1.2bn of consumer credit was borrowed, per month, in the two years to February 2020.

“Borrowing on credit cards, personal loans and car finance rose slightly but is still about a third of what it was in pre-pandemic times,” added AJ Bell head of personal finance, Laura Suter.

“Some of this will be driven by the lack of new car sales, leading to a drop in car finances, but it’s also because as a nation we’re borrowing less on credit since the pandemic reset many people’s finances.”

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