The Bank of England has revealed that annual growth in consumer credit continued to slow, falling to 5.6% in May, in its monthly Money and Credit update. The monthly flow of consumer credit in May was broadly in line with the average since July 2018, at £0.8 billion.

The Bank of England gross lending stats also revealed that net mortgage borrowing by households fell to £3.1 billion in May but the annual growth rate for mortgage lending remained stable at 3.2%, and has now been around 3% since late 2016.

Commenting on the figures, John Phillips, Operations director at Just Mortgages and Spicerhaart said “There is not a huge change here; net mortgage borrowing fell slightly, but the annual growth rate for mortgages has remained stable at 3.2%, which means it has now been steady at around 3% for almost three years. Approvals, however, were down for both house purchase and remortgaging, which could suggest that lending will fall over the next few months and growth may slow too.”

“There is no doubt that it has been a funny old few years for the mortgage market. Brexit has obviously had – and is still having – an impact, but I don’t think it is the only factor at play.”

“For many years now, borrowing costs have been very low, but wages have not been keeping pace with house prices, so while mortgages are affordable, deposits and stamp duty are not. Those who may have upsized in the past are now either remortgaging to borrow more and then extending, or just saving the money they would’ve used on stamp duty and investing it into their existing homes.”

“If the Government wants to get things moving again, they need to do something about the cost f moving. People are simply not prepared to throw thousands of pounds that could be sued to invest in a bigger home on stamp duty. Back in April, the House of Lords Committee on Intergenerational Fairness and Provision recommended changes to stamp duty because, they said it is ‘seriously distorting the market’ and I think they’re right. Until something is done about the crippling cost of stamp duty, the market will continue to struggle.”