August’s purchase approvals were below the six-month average of around 60,100, while remortgaging decreased to 34,000 from 34,600 in July, according to the Bank of England’s Money and Credit statistics.
Secured gross lending, which includes house purchases, remortgaging and other advances, fell month-on-month from £25.3bn to £23.6bn, sitting below the six-month average of £26.5bn. Repayments, meanwhile, decreased slightly in August from £21.1bn to £20.4bn.
Net mortgage borrowing increased to £4.4bn in August from £4.1bn in July, but it remains below the previous six-month average of £5.2bn.
Households increased their spending using consumer credit products such as credit cards, personal loans and car finance as monthly net borrowing increased to £2.5bn in August from £2.1bn in July, above the previous six-month average of £1.9bn.
Net borrowing on credit cards was £1.2bn in August, up from £0.9bn in the previous month, while borrowing through other forms of consumer credit increased to £1.3bn from £1.2bn over the same period.
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Jeremy Leaf, North London estate agent and former Royal Institution of Chartered Surveyors (RICS) residential chair, said: “Approvals may have slipped a little, but on the other hand, net borrowing has gone up, so on balance, we see buyers and sellers defying the doom mongers and getting on with moving plans despite nagging worries about rising mortgage costs and inflation. However, we have noticed on the ground that the time taken to arrange finance for property purchases is increasing, which may also be contributing to lower approval numbers.
“Looking forward, the Budget will further compromise the confidence of some, although this may be partly outweighed by the government’s intention to support aspiring first-time buyers.”
Richard Pinch, senior director at banking and credit advisory consultancy Broadstone, said: “Higher borrowing costs and continued macroeconomic uncertainty are slamming the brakes on the mortgage market, with approvals for both purchases and remortgages falling again in August.
“Despite some of the green shoots of economic recovery we have seen through the year, affordability pressures are clearly still biting as households head towards another challenging winter. The sharp rise in consumer credit borrowing, particularly on credit cards, suggests more households are leaning on credit to absorb everyday cost pressures.”
