The amount of debt repaid by individuals increased from £900m in December 2023 to £1.1bn in January 2024, the Bank of England (BoE) has found.

In its monthly money and credit report, the BoE also revealed that net mortgage approvals for house purchases increased from 51,500 in December to 55,200 in January, while net approvals for remortgaging remained stable at 30,900.

The effective interest rate on newly drawn mortgages fell by nine basis points to 5.19% in the same period.

The BaoE also revealed that net borrowing increased by £600m between December and January to £1.9bn.

Chief executive officer at Access Financial Services, Karl Wilkinson, commented: "It is a concern to see consumer credit borrowing rising by £600m to £1.9bn in January.

"We aren’t out of the woods yet. Borrowers still need to be cautious and request professional advice from mortgage brokers to make sure they get the right loan for them. At the same time, lenders need to maintain sensible lending policies to avert the danger of rises in repossessions."

Despite the amount of borrowing increasing, the BoE stated that households, on net, deposited £6.8bn in January.

However, household net deposit flows into national savings and investment (NS&I) dropped by £800m in January, from an increase of £600m in December.

Despite this, overall household deposits with banks and building societies, including NS&I accounts, grew by £6bn in January.

The BoE confirmed this is more than the average rate of £5.3bn in the past six months, but less than the £7.5bn recorded in October 2023.

Head of active savings at Hargreaves Lansdown, Mark Hicks, added: "It was a bumper month for savings, but not for NS&I. Savers voted with their feet, after it announced a plan to cut the premium bond prize rate. Meanwhile, those with maturing rates saw they could do better elsewhere.

"This won’t come as a shock to NS&I, which factored withdrawals in when it comfortably hit its annual target in the first six months of its financial year. However, it opens up a real opportunity for savers to find a more rewarding home for their money. Small banks, building societies and online savings platforms are pushing hard to attract cash, which is keeping some rates above 5%."

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