Household’s borrowing returned to pre-pandemic levels with £3.9 billion net borrowing in July, with increases in both mortgage borrowing and consumer credit, according to the latest Bank of England figures.

Household’s consumer credit borrowing increased £1.2 billion in July, following four months of net repayments. The interest rate on new consumer credit borrowing increased 22 basis points to 4.64% in July, while rates on interest-charging overdrafts increased 1.6 percentage points to 14.84%.

Net mortgage borrowing was £2.7 billion in July, while approvals for mortgages for house purchase increased to 66,300. Approvals remained below February’s pre-Covid level of 73,700. Effective mortgage interest rates were broadly unchanged.

Debt charity, Stepchange says that. the figures  may point to the underlying financial pressures many UK households are facing, which will crystallise into serious debt problems when unemployment support measures and payment holidays end,

Since May, StepChange has been publishing a monthly breakdown of client trends to try to understand how the pandemic is affecting household debt, and to help focus on the best ways of helping people who are affected. In July, the charity gave full advice to around 14,000 clients – a number that remains artificially suppressed by the support mechanisms that remain in place. However, a particularly notable feature of the July data is the unmistakable trend toward greater worries about unemployment.

Not only has the proportion of clients who are unemployed increased, but searches about redundancy on the charity’s website saw a massive 1800% increase in July compared with June. Yet the 16% of clients citing coronavirus as a reason for their debt includes a higher of proportion of people who are currently employed than the charity average, suggesting that employment is not a guaranteed protection against financial difficulty caused by the pandemic.

Commenting on the figures,, StepChange Head of Policy, Research and Public Affairs Peter Tutton said “For the first time in some months we are seeing household borrowing outstrip repayments, at a time when emergency support measures are winding down. It’s absolutely vital that we see ongoing support to help people get through the next period, whether they are in employment or not, if we are to avoid entrenching problem debt as a long-term legacy of the pandemic. We’re seeing young people, single parents and those already on low incomes being disproportionately affected – it’s important the Government doesn’t leave them even further stranded during the next phase of managing the crisis.”

Dave Harris, CEO of equity release lender, more2life, said “While today’s findings show overall lending levels in the mortgage market remain significantly lower than pre-crisis, there are positive signs of growth. Month-on-month increases to new mortgage approvals suggest that buyers have been taking advantage of the lending options on offer to help them during the coronavirus crisis – and lenders and advisers have played a crucial part in this.”

“The equity release market has also been working hard to support older borrowers, ensuring that those who have been financially impacted by the pandemic have been able to utilise their housing wealth to help them improve their financial wellbeing. For example, some retirees may have seen their income drop, while others have battled growing debt levels as a direct result of the crisis. Indeed, recent research by more2life shows that nearly a third (30%) of those aged 54 and over think that the pandemic will increase the amount of debt they have.”

“Seeking professional, specialist advice is crucial for older homeowners who have been affected by the crisis to ensure they are aware of solutions like equity release which could help them develop a long-term financial plan. By taking a holistic view of a client’s finances, advisers are best placed to ensure customers who require financial support during this period will be better-informed on the best option for them not only now, but also for the future.”

Richard Pike, Phoebus Software Sales and Marketing Director, said“As July was the first month that the stamp duty holiday came into effect the impetus that we expect it to give to the market was not particularly evident in these figures from the Bank of England.  However, all the evidence points to a continued recovery with many estate agents reporting a surge in properties coming to market.”

“The number of properties coming to market reflects many different scenarios, are people selling because they can get a better price while the stamp duty holiday is in effect, or are some having to sell because of a change in their circumstances.  The fact that people are continuing to pay down their debt shows a level of preparedness as we near the end of the furlough scheme and for many the prospect of redundancy.  For now, the housing market is, in relation to many other sectors, in rude health, and likely to remain that way at least until next April.”