UK Finance has published its July Household Finance update indicating that gross mortgage lending for the total market in July was £24.6bn, some 7.6 per cent higher than a year earlier.

Commenting on the data, Peter Tyler, Director at UK Finance, said “July saw steady growth in gross mortgage lending, driven largely by remortgaging as homeowners locked into attractive deals in anticipation of the recent base rate rise. Card spending has also strengthened, reflecting increased expenditure during the holiday period and an uplift in retail sales due to the World Cup and warm weather. However, the broader economic outlook remains mixed, with households continuing to see their incomes being squeezed by rising inflation. This may explain the shift towards deposits held in instant access accounts, as consumers opt to keep their money close to hand.”
Sean Kulan, Client Partner at Huntswood said“It’s no surprise to see credit card spending continuing to reach new heights, with the ONS reporting in July that UK consumer debt had reached £25bn. With more debt comes more risk, and its likely lenders will face further regulatory pressure to ensure consumers are able to afford the repayments. As part of this, it’s vital that lenders are well positioned to respond to changing regulatory pressures and give themselves sufficient operational capacity to intervene early in cases where it’s unlikely borrowers will be able to pay back the debt within the agreed terms.”

Richard Pike, sales and marketing director at Phoebus Software, said “July is, of course, a traditionally busy month in the property world, and it is encouraging to see even modest growth compared to the same month in 2017.  However, with so much speculation regarding the Brexit deal, or no deal, everywhere you turn at the moment it is likely to be reflected in the housing market in the coming months.  When house buying is such a huge financial undertaking, the decision to move or buy has to be affected by consumer confidence, which is likely to be dented amongst the constant barrage of ‘deal or no deal’ speculation.

“The market has been propped up recently by the continuous buoyancy in remortgaging but, with few people now left on variable or tracker rates, this too is likely to slow.  As we approach the deadline for Brexit even the threat of a no deal is likely to weigh heavy across our economy, how that will manifest itself in the housing market is difficult to predict, but it could bring along a period of stagnancy while people wait to see what happens.”

Other statistics from the figures show:

  • The number of mortgage approvals by the main high street banks in July fell by 0.8 per cent compared to the same month a year earlier. Within this, remortgaging approvals were 2.8 per cent higher than for the same period a year earlier. There was a fall in house purchase and other secured borrowing of 0.6 per cent and 11.7 per cent respectively.
  • Credit card spending was 8.1 per cent higher than a year earlier, with outstanding levels on card borrowing growing by 5.3 per cent over the year. Outstanding overdraft borrowing was 4 per cent lower compared to the same time last year.
  • Personal deposits grew by 1.2 per cent in the last 12 months. Deposits held in instant access accounts were 3.8 per cent higher than a year earlier.