Individuals repaid £1.4bn of mortgage debt on net in July following a record net borrowing in June of £17.7bn, new figures published by the Bank of England (BoE) have revealed.

The Bank described net repayments as “relatively rare”, with July’s figure just the second net repayment in the last decade after April 2020. It follows the record borrowing figure in June which was likely to have been boosted by the initial tapering off of the stamp duty holiday.

Gross lending fell to its lowest since June 2020, at £16.5bn, while gross repayments were a little below the 12-month average, at £18.1bn.

The Bank’s figures also showed that approvals for house purchases, which is an indicator of future borrowing, further decreased in July to 75,200. This was the lowest tally since July 2020, but remained above pre-February 2020 levels.

Approvals for remortgage, which only capture remortgaging with a different lender, rose to 37,400 in July from 35,800 in June – a figure that the BoE suggested “remains low” compared to the months running up to February 2020.

Commenting on the data, Coreco managing director, Andrew Montlake, said: “The net repayment in July is partly a reflection of the end of phase one of the stamp duty holiday and partly a result of the stupendously low rates on offer, which are seeing people remortgage in droves.

“The crazily low rate environment has also enabled people to repay off more of their mortgage than they may otherwise have been able to. Mortgage approvals were always going to fall after the stamp duty holiday as people switched their focus to the holidays but demand is still very much there. What's lacking is the supply to match it.”

The BoE also published consumer credit data and revealed that overall, individuals borrowed no additional consumer credit in July. Within this, they borrowed an additional £0.1bn of “other” forms of consumer credit – such as car dealership finance and personal loans – offset by net credit card repayments of £0.1bn.

On average, £1.2bn of consumer credit was borrowed per month in the two years to February 2020.

Hargreaves Lansdown personal finance analyst, Sarah Coles, commented: “Credit was curtailed by a triple whammy of a new-found enthusiasm for saving, a bigger cushion of cash to fall back on, and the fact that in many cases it proved difficult to part with our cash.

“In some cases, spending money proved far harder than planned. Uncertainty over changing rules meant many people felt they couldn’t book an overseas holiday, while lack of availability of accommodation in the UK convinced many to stay home.

“Millions of those who were able to splash the cash had their lockdown savings so they didn’t need to borrow. Meanwhile, millions of others chose to save instead: while the amount we put aside in savings fell back slightly, it remained well above pre-pandemic levels.”

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