Net mortgage debt owed by individuals fell to £4.1 billion in January, after rising from £4.5 billion in December, Bank of England data showed.
The Bank’s latest Money and Credit report shows that gross lending increased slightly in January, to £23.4 billion from £23.0 billion in December.
In contrast, gross redemptions rose to £19.1 billion in January from £18.8 billion in December.
The annual growth rate of net mortgage lending fell slightly from 3.4% in December to 3.3% in January.
Net mortgage approvals (that is, approvals after cancellations) for home purchases, which is an indicator of future lending, fell from 61,000 in December to 60,000 in January
The number of approvals for refinancing a mortgage (which only concerns refinancing with another lender) fell from 38,400 in December to 38,100 in January.
Commenting on the latest data from the BoE, Alice Haine, personal finance analyst at Evelyn Partners’ Bestinvest, said: “January savings and credit data painted a slightly bleaker picture than expected, as mortgage approvals declined, savings declined and consumer borrowing increased.”
“The outlook from here remains uncertain amid renewed tensions in the Middle East. This BoE data looks back, not forward, and Britain woke up on Monday to a very different picture after a weekend of spiraling conflict in the Middle East that is impacting energy prices, disrupting air travel and threatening supply chains.”
“Markets had become increasingly optimistic that the Bank of England would implement a seventh rate cut very soon, supported by falling inflation, rising unemployment and subdued economic growth.”
“But an increasingly fragile geopolitical backdrop could derail that expectation, as any significant jump in wholesale energy costs could reignite inflationary pressures.”
OnTheMarket president Jason Tebb notes: “Home purchase approvals – an indicator of future lending – fell again in January after falling in December, as inactivity and uncertainty in the run-up to the Budget continued to be felt. The post-Budget clarity has since contributed to steady confidence and encouraged buyers and sellers to go ahead with their plans.”
“Last year’s rate cuts had a positive impact on activity, and further cuts this year should boost activity and transactions. Interest rates on new mortgages continue to decline, which will help alleviate affordability challenges.”
Mark Harris, CEO of SPF Private Clients, added: “Although mortgage applications fell again in January, there is an underlying resilience in the housing market, which is starting to emerge now that the Budget has been sorted out.”
“The effective interest rate paid on new mortgages fell to 4.09 percent and the interest rate on the outstanding stock of mortgages also fell to 3.9 percent, indicating that affordability continues to decline.”
“As we head into spring, the good news for borrowers is that lenders are eager to lend and have the money available to do so. Many of the major lenders have cut their mortgage rates and while some have increased prices, we expect rates to rise, rather than change significantly one way or another.”
“The number of remortgages has fallen slightly, indicating that borrowers coming down from low interest rates are typically still looking for the best possible rate, rather than opting for the convenience of staying with their existing lender.”