Consumer borrowing remains steady

The Bank of England has announced its latest Money & Credit statistics which showed that the extra amount borrowed by consumers to buy goods and services was £1 billion in June, in line with the average of the past year. Annual lending growth to UK consumers slowed to 5.5% in June however, from 5.7% in May, the slowest rate since April 2014.

The number of UK mortgage approvals hit 66,400 in June, up from 65,650 in May.

Commenting on the figures Richard Pike, Phoebus Software sales and marketing director, says “The latest figures from the Bank of England show another picture of a fairly stable market, taken over the last three years.  However, the interesting aspect is the rise in mortgage approvals for both purchase and remortgaging.  When remortgaging has been the one thing that has held the market up for such a long time, it was surprising to see the number of purchases increase recently while remortgaging fell.  We wait to see if this is a seasonal blip of whether the purchase market is truly beginning to make headway again.

“As things settle down in Parliament and we prepare ourselves for the next milestone, we will watch with interest to see how the market is affected and whether the confidence shown in June’s figures continues.  It is of course, impossible to predict but, going on these figures, it may just be that this is the new normal.  At least for a while.”

Separately UK businesses raised £3.3 billion of net finance in June, primarily reflecting borrowing from banks.

New figures from the Bank of England show that net mortgage borrowing hit £3.7bn in June, up from £2.9bn in May.

However, despite this sharp month-on-month rise, the total was only close to the average of the previous three years, and the annual growth rate remained at 3.1 per cent, around which level it has sat since 2016.

Approvals for house purchases also rose, from 65,640 in May to 66,440, with the value increasing from £12.7bn to 12.9bn.

There was a similar story with remortgaging numbers, rising only slightly in number, from 46,820 to 46,970, with the value remaining at £8.2bn month-on-month.

Phoebus Software sales and marketing director Richard Pike points to this rise in remortaging when he says: “When remortgaging has been the one thing that has held the market up for such a long time, it was surprising to see the number of purchases increase recently while remortgaging fell [over the last few months].

“We wait to see if this is a seasonal blip of whether the purchase market is truly beginning to make headway again.”