Net borrowing of mortgage debt by individuals fell from £5.9bn to £4.0bn in October following the fallout from the government’s mini-Budget, figures from the Bank of England (BoE) have shown.

This was the lowest level reported by the Bank since November 2021, when the figure sat at £3.8bn.

Approvals for house purchases, which the BoE uses an indicator of future borrowing, decreased to 59,000 from 66,000 in September, a figure that was a fall on the average for the past six months, also 66,000. Remortgage approvals, which only capture remortgaging with a different lender, increased slightly in October, to 51,300, from 49,500 in September. This latest figure was also higher than the previous six-month average of 47,300.

The Bank’s figures also revealed that gross mortgage lending increased to £28.2bn in October, up from £27.2bn in September, while gross repayments climbed from £21.5bn to £24.8bn.

“There is no denying that October was an eventful month for the mortgage market, advisers and the UK economy, and the BoE’s update today certainly reflects this,” commented chairman at Air Club, Stuart Wilson.

“However, total mortgage borrowing in October remained above levels seen before the pandemic, despite a slight fall in approvals for house purchases, demonstrating the resilience of the sector.

“Recently, the government’s Autumn Statement has reassured markets after a turbulent period and we’re still seeing strong demand in the mortgage and later life lending markets, which we fully expect to continue as we settle into the new year.

“With older borrowers being particularly vulnerable to soaring inflation rates, the mortgage affordability squeeze and sky-high utility bills, it is vitally important that they speak to a specialist adviser if they believe they need support.”

The BoE also reported figures for the consumer credit market, which revealed that individuals borrowed an additional £800m in consumer credit in October, on net, following £600m of borrowing in September. This also reflected a large fall on the previous six-month average from £1.3bn.

According to the data, the additional consumer credit borrowing in October was split between £400m on credit cards, which increased from £100m in September, and £400m through other forms of consumer credit, such as car dealership finance and personal loans.

The Bank also reported that UK households deposited an additional £6.2bn with banks and building societies in October, compared to £8.1bn in September. Within the household deposits measure, flows into time deposits in October, at £11.3bn, were the highest on the BoE’s record, in a series going back to December 1997.

“People made the most of a leap in savings rates and shifted their money into fixed-term accounts in their droves in October – marking the highest savings on record,” said head of personal finance at AJ Bell, Laura Suter.

“A huge £11.3bn of money was saved into fixed-term accounts as rates leapt up following the mini-Budget and fierce competition in the savings market – four times as much as the previous month.

“Some of this was money shifted from easy-access accounts, as people pounced on better savings rates for locking money away for longer. The average rate on two-year fixed-rate bonds hit 3.55% in October, the highest since 2009, while three-year bonds also hit a 13-year high.

“On the flip side, there was an increase in the amount we all borrowed in October, up to £800m. This figure will keep on climbing as the cost of Christmas starts to hit people’s credit cards and overdrafts. While many people will be making cutbacks this year over the festive period, there will still be lots of money spent that people don’t have.”

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