UK Finance has published its household finance update for September 2018 which reveals that Gross mortgage lending across the residential market in September was £21.5bn, some 1.2 percent lower than last September. The number of mortgages approved by the main high street banks in September was 9.1 percent lower than last September; approvals for house purchase were 10.1 percent lower, remortgage approvals were 7.4 percent lower and approvals for other secured borrowing were 9.8 percent lower.

The £10.0bn of credit card spending in September was 3.4 percent higher than last September. Over the past twelve months, the outstanding level of credit card borrowing grew by 5.7 percent. Personal borrowing through loans and overdrafts grew by 2.3 percent in the year to September. Personal deposits in total grew by 0.9 percent over the past twelve months. Instant access deposit levels were 3.1 percent higher than last September.

Commenting on the data, Eric Leenders, Managing Director of Personal Finance, UK Finance, said “The mortgage market softened slightly in September, following strong remortgaging activity in the months preceding the recent base rate rise. There has been modest year-on-year growth in card spending. However, borrowing through personal loans and overdrafts has contracted slightly in recent months, suggesting demand for unsecured household finance is becoming more subdued.”

“Consumers are increasingly choosing to keep cash close to hand, with deposits held in instant access accounts showing steady growth.”

John Phillips, Group Operations director at Just Mortgages and Spicerhaart said “Today’s UK Finance figures show that Brexit uncertainty is still affecting the mortgage market while many people may be waiting to see what Monday’s Budget may bring in terms of housing incentives before making any big decisions: Last month, remortgaging dominated the housing market, with approvals up 9.2 percent while house purchase figures fell but the picture this month is more sombre. Overall, mortgage approvals are down 9.1% compared to last September, with house purchase figures down 10.1% and remortgage approvals down 7.4%.”

“These figures suggest that the current political uncertainty is continuing to have a negative impact on the housing market while the upcoming Budget – which may include further housing incentives – may also be a factor in why things have slowed down as people wait to see if it is worth waiting until after Monday before making any big decisions.  The fact remortgaging has dropped, however, is the main difference here as house purchase figures have been falling for a while. There was a flurry of remortgage activity in the months preceding the recent rise, so the fact remortgage is down, is likely to do with that more than any marked trend.”

“The figures also show growth in credit card spending and borrowing through loans and overdrafts; this could suggest that people are struggling financially and needing to turn to these forms of finance, or it could simply show that consumers are choosing to spend while borrowing is fairly low and keep their savings healthy while Brexit uncertainty rumbles on.”

Paul Hunt, Phoebus Software managing director, said “We are beginning to see something of a trend with the market waning in the past few months.  However, recent reports show first-time buyer activity at a 14-month high and there are also growing signs that there is still a good amount of appetite with some estate agents reporting an increase in the number of properties coming to market.”

“Nevertheless, to say we are heading into choppy waters is probably an understatement as the politics surrounding Brexit negotiations continue to cast doubt in people’s minds.  However, with mortgage lenders having quotas to fill and targets to hit, we could see a raft of deals coming to market to tempt.  As consumers turn to credit cards to fund their spending, the question will be whether, as we head towards Christmas, people choose property or the path of least resistance?”