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.”

Share Story:

Recent Stories

Helping landlords make their cash work harder
MoneyAge Editor, Adam Cadle, talks to Family Building Society BDMs, Arif Kara and Nathan Waller, about the resilient BTL market, the wide variety of landlords that Family Building Society caters for, and how niche products like an Offset mortgage can help improve cashflow.

An outlook on the BTL market
MoneyAge Editor, Adam Cadle, talks to Landbay senior regional account manager, Alex Witham, about current market sentiment within the BTL space and Landbay’s success in this area

Empowering advisers: A decade of education in Later Life Lending with Air Academy
Michael Griffiths is joined by chairman of Air Club and former founder and CEO of Air, Stuart Wilson, and head of the Air Academy, Daniel Holden, to look back on a decade of business focused learning at the Air Academy.


Subscribe to our newsletter to receive breaking news and other industry announcements by email.

  Please tick here to confirm you are happy to receive third party promotions from carefully selected partners.