Mortgage borrowing rises for fourth consecutive month

Based on the latest Money and Credit figures published by the Bank of England, this latest jump also pushed mortgage borrowing to its highest level since January 2023. Gross lending, meanwhile, rose by £600m – going from £19.1bn to £19.7bn – while gross repayments were little changed at £18.9bn.   

Reflecting on this, StepChange’s director of external affairs Richard Lane said: “The continued rise in mortgage borrowing and the slump in mortgage approvals revealed by today’s statistics is no surprise given the pressures on homeowners from stubbornly high interest rates and the wider economic climate.  

“Our latest polling reveals that two thirds of mortgage holders (65%) say the rise in interest rates has had a negative effect on their overall financial situation.The pause in rate rises last week will bring some relief, but borrowers are still facing significantly higher costs than they would have anticipated 18 months ago.  

“Private renters are also facing increasingly unaffordable housing costs, with many having seen their rent rise due to their landlords passing on higher borrowing costs. With a larger proportion of people’s incomes taken up by housing costs, there’s a risk of people falling behind with household bills or credit repayments as they try to maintain rent or mortgage payments to avoid falling into arrears.” 

As for consumer credit, individuals borrowed – on net – an additional £1.6bn inAugust, up from the £1.3bn figure seen in July. This was largely driven by increased borrowing through other forms of consumer credit, from £600m to £1bn – while borrowing on credit cards saw a small increase to £700m during the same period.  

Meanwhile, the annual growth rate for all consumer credit rose to 7.6% following a slight dip to 7.3% in July. This was driven by the increase in the annual growth rate for other forms of consumer credit to 5.8% in August, compared to 5.4% in July.  

Reflecting on this, David Cheadle – acting chief executive of the Money Advice Trust – said: “Consumer credit borrowing is rising at a time when high costs continue to hit household budgets hard.

“At National Debtline we are hearing from people whose incomes are not able to keep up with the cost of essentials, with many turning to credit to make up the shortfall. The risk is that households using credit to plug gaps in their finances will face further difficulty down the line as debts mount.

“It’s vital that all creditors ensure customers experiencing difficulty are supported, including offering forbearance and affordable repayment options and signposting to debt advice.”