Approvals for both purchases and remortgages fell again in August, with mortgage borrowing and consumer credit borrowing rising from the previous month, according to the Bank of England’s latest data.

The central banks' Money & Credit statistics for August found that net mortgage approvals - an indicator of future borrowing - for house purchases fell to 54,900 from 55,900 in July and were below the six-month average of around 60,100. Remortgage approvals also declined, to 34,000 from 34,600.

Mortgage borrowing increased to £4.4bn in August from £4.1bn in July, but remained below the previous six-month average of £5.2bn.

Secured gross mortgage lending fell to £23.6bn in August from £25.3bn in July, while the annual growth rate of net mortgage lending remained unchanged at 3.6%.

Consumer credit borrowing, meanwhile, increased to £2.5bn from £2.1bn in July and was above the previous six-month average of £1.9bn. Credit card borrowing rose to £1.2bn from £0.9bn, while other consumer credit, including car finance and personal loans, increased to £1.3bn from £1.2bn.

Household deposits increased by £4.7bn in August, with £4.4bn flowing into ISAs, while withdrawals of £1.6bn from interest-bearing sight accounts partly offset the increase.

Richard Pinch, senior director at Broadstone, said: “Higher borrowing costs and continued macroeconomic uncertainty are slamming the brakes on the mortgage market, with approvals for both purchases and remortgages falling again in August.

“Despite some of the green shoots of economic recovery we have seen through the year, affordability pressures are clearly still biting as households head towards another challenging winter.

“The sharp rise in consumer credit borrowing, particularly on credit cards, suggests more households are leaning on credit to absorb everyday cost pressures.

“For lenders, the priority must be to identify signs of financial strain as early as possible and ensure borrowers have access to appropriate support and flexibility before temporary affordability pressures become more serious.”

Richard Pike, sales and marketing director at Phoebus Software, added that the fall in mortgage approvals suggested the tentative improvement seen over the summer may have “lost momentum”, with affordability and uncertainty around interest rates continuing to make households cautious.

“The autumn figures will now be particularly important. If approvals continue to fall, it would point to a more sustained weakening in demand. If they stabilise and recover, this month’s decline may prove to have been another short-term fluctuation in an otherwise resilient market,” Pike said.

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