Mortgage borrowing increased by £1bn in December

31st January 2025

Latest Bank of England’s Money and Credit data has found that net borrowing of mortgage debt by individuals increased by £1 billion to £3.6 billion in December, bouncing back from a decrease in net borrowing of £0.9 billion in November. The annual growth rate for net mortgage lending rose to 1.5%, from 1.3% in November, continuing an upward trend since last April.

The data also showed that house purchase mortgage approvals increased slightly by 500 to 66,500 in December, rebounding from a fall of 2,300 in November. Approvals for remortgages fell by 700 to 30,500, falling for a second consecutive month.

Borrowing of consumer credit by individuals increased slightly to £1.0 billion, from £0.9 billion in the previous month with a small rise in borrowing through credit cards growing to £0.4 billion in December, from £0.3 billion in November. Net borrowing through other forms of consumer credit (such as car dealership finance and personal loans) remained at £0.7 billion in December.

Responding to the data, Richard Lane, Chief Client Officer at StepChange Debt Charity, said “The steady increase of mortgage debt borrowing is unsurprising as interest rates began to slowly fall toward the end of last year. But with rates still much higher than they were a few years ago, among our own clients we’ve seen a steep jump in the average amount of mortgage arrears – rising by over 70% year on year. Many households will be struggling to absorb higher mortgage costs, or it may mean they’re falling behind with other financial obligations in order to keep up.

“We’ve also seen a sharp rise in client volumes in January compared to December, which is often the case at this time of year – as people struggle with debt from the festive season or take the step to address debt in the new year. Unfortunately, with few signs of cost of living pressures easing up, our latest polling shows that two in five (41%) people expect their financial situation to worsen in 2025. If you are worried about your finances, it’s never too soon to get support – reach out to free and impartial charities like StepChange for expert guidance.”

Tom Cuppello, Director, Risk, at Broadstone, said “There was considerable growth in mortgage borrowing in December alongside a rise in mortgage approvals as buyers rush to finalise purchases before the Stamp Duty deadline in April. Despite gloom persisting across the UK economy, there is the expectation of further interest rate cuts from the Bank of England through the year which should further support mortgage borrowers as the property market remains resilient.”

“Consumer credit volumes ticked up slightly in December but there was no Christmas credit card binge as borrowers exercised caution amid persistent gloom around the UK economy and continued cost of living pressures. Confidence among consumers remains low but further interest rate cuts through 2025 and hopes that the Government’s push for growth will eventually put more pounds into people’s pockets are offering green shoots.

“However, for the meanwhile lenders must ensure they are helping borrowers select the most appropriate solutions for their personal circumstances to navigate the current uncertainty.”