Net borrowing of mortgage debt by individuals fell by £1.0bn to £2.5bn in November, according to the Bank of England’s report published today, the 3rd of January 2025.
Net mortgage approvals for house purchases dropped to 65,700 in November, while approvals for remortgaging decreased to 31,200.
In consumer credit, net borrowing decreased slightly to £0.9bn in November from £1.0bn the previous month.
Private non-financial corporations (PNFCs) saw net borrowing of £1.5bn in November, compared to £1.8bn of net repayments in October.
The annual growth rate for net mortgage lending rose to 1.3% in November from 1.1% in October, continuing an upward trend since April 2024.
Gross lending increased to £20.7bn, up from £20.3bn in October, while gross repayments remained unchanged at £18.0bn.
The effective interest rate on newly drawn mortgages decreased by 0.11% to 4.50% in November, the lowest since April 2023.
Conversely, the rate on the outstanding stock of mortgages rose from 3.78% in October to 3.80% in November.
Net borrowing through credit cards fell from £0.4bn in October to £0.3bn in November, while borrowing through other forms of consumer credit remained steady at £0.6bn.
The annual growth rate for all consumer credit decreased to 6.6% in November, down from 7.3% in October.
Growth rates for credit card borrowing fell to 8.0% from 9.4%, and for other forms of consumer credit, it decreased to 5.9% from 6.3%.
Households’ deposits with banks and building societies rose by £0.2bn in November, following net deposits of £18.8bn in October.
This increase was driven by additional deposits of £3.4bn and £1.7bn into interest-bearing and non-interest-bearing sight accounts, respectively.
Reaction:
Nathan Emerson, CEO of Propertymark:
“The impact of higher interest rates without doubt has had a profound impact across the housing market.
“Consumers need to feel a degree of confidence within their financial position to approach the buying and selling process, and it is essential that aspects such as inflation are managed robustly to keep long-term stability across the economy, which is needed for a healthy and secure housing market.
“Propertymark is keen to see interest rates lowered further when conditions permit to help spur growth in 2025.”
Tomer Aboody, director of MT Finance:
“The decline in net mortgage approvals after months of increases shows we can take nothing for granted, with consumer confidence perhaps taking a hit after the Budget.
“Further interest rate cuts, which are expected in the new year, should help boost those numbers and get them back on track.
“Despite lower borrowing rates, we are still living in a higher cost environment than most of us are used to.
“Sellers may try to charge a premium because the cost of everything is higher but are likely to find that buyers aren’t prepared to pay it.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Mortgage approvals for new purchases slipped, which comes as a surprise and suggests ups and downs for the market in coming months rather than a steady improvement.
“Remortgaging numbers dipped very slightly, but this could mean more borrowers stuck with their existing mortgage providers rather than switching to a new lender.
“The effective interest rate paid on new mortgages decreased again to 4.5% as lower pricing at the time is reflected in the official figures.
“With a number of lenders cutting rates this week, this may dip further in coming months if others follow suit.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“Mortgage approvals are arguably the most interesting piece of the housing market jigsaw.
“These numbers reflect direction of travel for the next few months at least and show that buyers paused for breath after the pre-budget rush to possibly avoid higher taxes.
“However, it is probably a little early to assess whether there will be a more sustainable recovery until the impact of first-time buyers trying to take advantage of lower Stamp Duty rates ending in March form a lower proportion of the figures.
“Looking forward, we don’t expect too much change in pricing bearing in mind the number of new listings which became available in time for the traditional Boxing Day rush.”