Net borrowing of mortgage debt by adults in the UK fell slightly in July to £5.1bn, new figures from the Bank of England (BoE) have indicated.

This was down from £5.3bn in June, but remained above the BoE’s pre-pandemic average of £4.3bn in the year up to February 2020.

According to the Bank’s figures, gross lending increased to £26.1bn in July from £24.6bn in June, while gross repayments increased to £20.8bn, from £19.4 billion.

Approvals for house purchases, which the BoE uses an indicator of future borrowing, increased slightly to 63,800 in July, a total up from 63,200 in June, although this is below the 12-month pre-pandemic average up to February 2020 of 66,800.

The Bank’s data showed that approvals for remortgaging, which only capture remortgaging with a different lender, increased to 48,400 in July, from 43,300 in June. However, his total also remained below the BoE’s 12-month pre-pandemic average up to February 2020 of 49,500.

“Today’s figures reflect a resilient mortgage market,” commented TMA Club development director, Lisa Martin. “Despite recent interest rate hikes and the cost of living crisis influencing a more cautious approach by lenders, it is positive to see a slight increase in gross lending and mortgage approvals, resulting from a recent spike in remortgages.

“As prices are likely to continue to rise throughout the year, and another potential rate rise on the horizon, customers will be looking to brokers to act swiftly to secure the best deals and lock into fixed rates before mortgages are replaced or pulled from the market.”

Distribution Director at MPowered Mortgages, Emma Hollingworth, added: “With the cost of living continuing to increase and mortgage rates increasing, many households will find their finances squeezed.

“Those looking for a suitable and affordable mortgage product will need a quick and certain answer to what mortgages are available to them. It has never been more important that it is now to execute mortgages as quickly as possible, whilst also easing the pressure on homebuyers and remortgagers during what is a challenging time to purchase and remortgage a home.”

The BoE’s figures also revealed that individuals across the UK borrowed an additional £1.4bn in consumer credit in July, on net, to follow £1.8bn borrowed in June.

This latest total was above the 12-month pre-pandemic average up to February 2020 of £1.0bn, with the additional consumer credit borrowing in July split between £700m on credit cards, and £700m through other forms of consumer credit, such as personal loans and car dealership finance.

Furthermore, the annual growth rate for all consumer credit increased to 6.9% in July, which is the highest rate since March 2019 (7.2%).

Senior personal finance analyst at Hargreaves Lansdown, Sarah Coles, added: “Runaway price rises have forced more of us to turn to credit, and there’s a real risk that more borrowing is on the cards.

“The summer is always a particularly expensive time of year, but the surge in borrowing should ring alarm bells. The growth of credit card debt has accelerated as inflation has taken hold.

“While those on higher incomes will have been able to fall back on lockdown savings, and those on the very lowest incomes will have struggled to get more credit, those in the middle are increasingly relying on credit cards to help make ends meet. This feels like a solution to the inflation problem in the short-term, but over time is going to end up making the problem even worse.”

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