BoE: Net mortgage debt up to £1.5bn in February
Net mortgage debt for individual borrowers rose to £1.5bn in February, which was the highest figure since January 2023 (£1.9bn), according to the Bank of England.
The bank’s money and credit report for February 2024, published today, revealed that gross mortgage lending also rose from £17.1bn in January to £18bn in February, while gross repayments decreased from £18.5bn to £16.7bn over the same period.
The effective interest rate paid on newly drawn mortgages fell by 29 basis points, to 4.9 per cent, while the rate on outstanding mortgages increased by seven basis points, from 3.41 per cent in January to 3.48 per cent in February.
Mortgage approvals, which are an indicator of future borrowings, rose from 56,100 to 60,400 – the highest since September 2022 (65,300). Net approvals for remortgaging also increased from 30,900 to 37,700 over the same period.
“These figures are further confirmation that the housing market has seen a bumper recovery in 2024, after a volatile 2023,” said Saffron for Intermediaries head of business development Tony Hall. “With inflation slowing to 3.4 per cent in February, we are optimistic that borrowers will be able to benefit from greater certainty and stability in the market this year.
“We haven’t quite reached that point yet, however. In the last week, we have seen some lenders drop rates, while others have put them up, showing the off-beat rhythm of mortgage pricing at the moment as lenders wait for swap rates to settle. Other lenders are turning to new ways to help release the pent-up demand that has built up through a period of higher rates. For example, lenders are considering innovative products, such as 99 per cent LTV mortgages, in an attempt to help first-time buyers onto the ladder.”
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Meanwhile, net consumer credit borrowing decreased to £1.4bn in February, from £1.8bn. This was mainly driven by lower net borrowing through credit cards, which fell from £0.8bn to £0.5bn.
Net borrowing through other forms of consumer credit (such as car dealership finance and personal loans) decreased slightly from £1bn to £0.9bn.
The interest rate on interest-charging overdrafts decreased by 13 basis points to 22.79 per cent in February, while the same on new personal loans to individuals dropped by 26 basis points to 8.76 per cent.
By contrast, the effective rate on interest-bearing credit cards increased by 26 basis points to 21.55 per cent.
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In February, UK non-financial businesses repaid, on net, £3.3bn of loans from banks and building societies (including overdrafts), compared with £0.2bn in January.
Within this measure, large non-financial businesses repaid £2.3bn in February compared to net zero of borrowing the previous month.
Small and medium-sized (SME) non-financial businesses made net repayments of £1bn in February, compared to £0.2bn in January.
The annual growth rate of borrowing by large businesses was 1.4 per cent in February, up from 1.2 per cent in January. The growth rate of lending to SMEs decreased slightly further, from -4.8 per cent to -4.9 per cent.
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