The total number of mortgage approvals in the UK slipped to 35,600 during December, down from 46,200 in November, new Bank of England (BoE) figures have indicated.

December was the fourth consecutive monthly decrease in approvals for house purchases, and the lowest since May 2020.

According to the BoE’s latest data, if the onset of the COVID-19 pandemic and period immediately thereafter is excluded, house purchase approvals are actually at their lowest level since January 2009, when they reached 32,400.

The figures also showed that net borrowing of mortgage debt by individuals in the UK fell from £4.3bn to £3.2bn in December. Gross lending dropped from £25.1bn in November to £23.3bn in December, while gross repayments were broadly unchanged at £21.0bn.

Approvals for remortgaging, which only capture remortgaging with a different lender, also saw a fall in December, to 26,100 from 32,600 in November, which was the lowest level since January 2013 (25,800).

“With the cost of living remaining high and interest rates still rising this is not unexpected,” commented CEO at fintech brokerage Loan.co.uk, Paul McGerrigan.

“The property market should improve during January as buyers traditionally return in force in the new year, however, economic uncertainty and the BoE’s pressure on interest rates will continue to have an effect.

“Pressures on borrowers is sure to mount after the bank’s Monetary Policy Committee decision on interest rates on Thursday – a 0.5% increase looked a shoo-in but there have been a few suggestions that 0.25% might prevail.

“Any increase will hurt borrowers in the short-term. There may be light at the end of the tunnel as some traders are pricing in a rate reduction later in the year to kickstart the economy once inflation has significantly reduced.”

The BoE also published figures on consumer credit, which revealed that UK individuals borrowed an additional £500m in consumer credit in December, on net, following £1.5bn of borrowing in November. This was also significantly down on the Bank’s previous six-month average of £1.2bn.

This additional consumer credit borrowing in December was split between £500m of repayments on credit cards, the first net repayment since December 2021, and £1.0bn of borrowing through other forms of consumer credit, such as personal loans and car dealership finance – the highest since October 2019.

McGerrigan added: “There are strong signs consumer attitude is far more cautious, with households making the first net repayment on their credit since December 2021.

“Inflation is on a downward trajectory but it’s still at record highs and many households are forced to utilise debt tools to cover their basic costs. Many borrowers leveraged credit availability to enjoy Christmas, which is understandable after the previous two, but not at the rate expected.

“This focus on reducing debt rather than spending will help contribute to continued lowering of inflation which is No.10’s number one focus.”

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