Consumers borrowed £1.2bn in consumer credit in November

Mortgage approvals for house purchases were relatively unchanged at 67,000 in November, close to the 12-month average up to February 2020 of 66,700. Approvals for remortgaging rose to 44,500 in November - but this remains low when compared to the 12-month average up to February 2020 of 49,500.  

In addition to this, the effective interest rate on newly drawn mortgages fell to a new series low of 1.50% - whilst the rate on the outstanding stock of mortgages fell to a new series low of 2.02%.

Individuals also borrowed £1.2bn in consumer credit in November. The majority of this was the £900m of additional borrowing on credit cards, which is the strongest net borrowing since July 2020. 

Borrowing on other forms of consumer credit, such as car dealership finance and personal loans, amounted to £400m of net lending. Overall the annual growth rate for all consumer credit increased to 0.4% in November from -1% in October, while the annual growth rates of credit cards and other forms of consumer credit were -0.2% and 0.6%, respectively. 

Commenting on the net borrowing and mortgage figures, Just Mortgages’ national operations director John Phillips, said: “While the market has certainly cooled since the end of the stamp duty holiday, approvals remained robust in November.

“Traditionally, in the build up to Christmas things begin to slowdown, however this past year has been anything but normal. The stamp duty holiday drove historic levels of activity in the first three quarters of 2021, and while there was a drop in October, activity bounced-back in November.

“Net borrowing rebounded from the dip in October, and with property prices looking set to continue rising, this trend may continue in the following months. While rates are expected to rise following the Bank of England increasing base rate in December, they will be increasing from a historically low starting point. 

“The ‘effective’ interest rate on newly drawn mortgages fell to 1.50% in November, and these low rates may help spark activity with buyers looking to capitalise before rates inevitably rise.”

Non-financial businesses, meanwhile, borrowed £2.1bn worth of bank loans in November - this is compared to the £600m figure recorded in October. In addition to this, large non-financial businesses borrowed £2.9bn in November - an £800m increase when compared to the £2.1bn borrowed in October, with the annual growth rate of borrowing by all large businesses increased to 1.4% in November from 0.9% in October. 

As for repayments, small and medium sized businesses (SMEs) repaid £800m, this is the eighth month in a row of net repayments by SMEs. The annual growth rate fell to -3.3% in November, the lowest since May 2013.