Net mortgage debt falls £800m in December – BoE

UK homeowners repaid a net £800m in December, compared to net zero in November, according to new figures published by the Bank of England.

The annual growth rate for net mortgage lending was also flat for the first time since the BoE’s series began in March 1994, a new series low.

Gross lending continued to increase, from £16.4bn in November to £17.2bn in December, while the bank also reported that gross repayments increased, from £15.6bn to £19.1bn over the same period.

Net approvals for house purchases, which the Bank uses as an indicator of future borrowing, saw a marginal climb from 49,300 in November to 50,500 in December. Net approvals for remortgaging, which just captures remortgaging with a different lender, also saw a climb, from 25,700 to 30,800.

Air CEO, Paul Glynn, commented: “December is traditionally a slower period in the property market. We can anticipate a significant uptick in the January data next month after what has been a buoyant start to 2024 for the housing market. Come next month, we may see some notable differences, especially as the increased competition between lenders begins to open new windows of opportunity.”

Managing director of capital markets and finance at LiveMore, Simon Webb, added: “It is house purchase approvals that really indicate how much more confident the mortgage market is compared to this time last year.

“Today’s figures show an increase in mortgage approvals for house purchases from 49,300 in November to 50,500 in December. This is a great comeback from December 2022, when mortgage approvals dropped to a three-year low of 35,600 from 46,200 in November.

“Interest rates, however, are still hurting consumers. Despite the fact that the interest paid on newly drawn mortgages fell by six basis points to 5.28% in December – the first drop since November 2021 – that’s still a hike above the interest rate at the same period last year, when the rate increased to 3.67% in December 2022. Clearly, we have our work cut out for us in 2024.”

The BoE’s latest figures also showed that net consumer credit borrowing fell to £1.2bn in December, from £2.1bn in November.

This was mainly driven by lower borrowing through credit cards, which fell from £1.0bn to £300m in the same period. Similarly, net borrowing through other forms of consumer credit, such as car dealership finance and personal loans, also fell from £1.1bn in November to £900m in December.

The annual growth rate for all consumer credit decreased marginally and stood at 8.5% in December.

Reacting to the fall in consumer credit borrowing, mortgage expert at Quilter, Charlotte Nixon, said: “This decrease suggests that individuals might be more hesitant to take on new debts for personal spending, likely due to higher living costs, uncertainty about future income, or a shift towards more conservative financial behaviour in these uncertain economic times, which is not a bad thing given the precarious nature of finances at the moment.”

She added: “Overall, these figures reflect a cautious and conservative approach by individuals in managing their finances during the cost of living crisis but some life does seem to be being breathed back into the housing market. The focus does now seem to be on reducing debts, saving more, and being careful about taking on new financial obligations.”



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