Approvals for house purchases decreased significantly to 66,800 in September, down from 74,400 in August, figures from the Bank of England (BoE) have confirmed.

This figure for approvals, which the BoE uses as an indicator of future borrowing, still remained above the past six-month average of 67,200.

Approvals for remortgaging, which only capture remortgaging with a different lender, also decreased in September, to 49,100 from 49,500 in August. However, this figure was higher than the past six-month average of 47,100.

According to the Bank’s latest data, the monthly net total of borrowing of mortgage debt by people in the UK remained at £6.1bn in September, which was above the past six-month average of £5.7bn. Gross lending increased to £27.0bn in September from £25.9bn in August, while gross repayments were little changed at £20.6bn in September, the BoE’s figures showed.

Elsewhere, the data showed that the ‘effective’ interest rate – the actual interest rate paid – on newly drawn mortgages increased by 29 basis points to 2.84% in September. This is the largest monthly increase since December 2021, when the BoE’s base rate began rising. The rate on the outstanding stock of mortgages increased by seven basis points, to 2.24%.

Senior personal finance analyst at Hargreaves Lansdown, Sarah Coles, commented: “BoE figures capture the initial impact as the mini-budget collided with the mortgage market, but we’re likely to see the shockwaves ripple through it in the months to come too.

“Despite the fact the mini-budget hit within a week of the end of the month, it was long enough to see the biggest jump in mortgage rates in 2022 so far, and a 10%  drop in the number of mortgages being approved for the coming months.

“We already know from various house price indices that demand fell immediately, but this is the first clear overall picture of the mortgage market in September – and it doesn’t look pretty. A 10% drop in the number of mortgages approved for future purchases is a significant overnight change. We can expect this to feed into house sales and price data in the coming months.”

The BoE also published figures for the consumer credit space, and revealed tear individuals borrowed an additional £700m in consumer credit in September, on net, following £1.2bn of borrowing in August

This was the lowest level since December 2021 (£300m), with the Bank revealing that the additional consumer credit borrowing in September was split between £100m on credit cards, a figure that has fallen from £700m in August, and around £600m through other forms of consumer credit, such as car dealership finance and personal loans.

“The cost of living crisis is still pushing more people to borrow, although credit card use dipped slightly in September,” said head of personal finance at AJ Bell, Laura Suter. “The annual growth rate in consumer credit rose again in September and is at the highest rate since early 2019. The cost of credit is also rising, with credit card interest at its highest rate since records began in 2012 – standing at 18.96% in September.

“The reality is that these official debt figures won’t capture the full picture, as lots of people will be using debt that’s not captured – such as Buy Now Pay Later, informal loans from family and friends and last-resort options like loan sharks.”

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