Homeowners repaid £418m more than was advanced during the month as new lending by banks and building societies remained subdued. The results mark the first time net lending has been negative since the BoE began collecting data in its current format in 1993.

The steep fall in net lending was driven by the ongoing contraction in the amount building societies are advancing.

Brian Murphy, head of lending at the Mortgage Advice Bureau, warned consumers were retrenching like never before.

He explained: “The latest house purchase and remortgaging figures are in line with what we are seeing ourselves, although there is likely to be a slight dip in August for seasonal reasons. Nevertheless, we expect lending to continue to strengthen throughout the autumn.”

He added: “Particularly encouraging is the fact that more people are now remortgaging rather than reverting to their lender’s SVR. Although two and five-year fixed rates are approximately half a percent higher than they were in May, they are still competitive. People are aware of where we are in the interest rate cycle and are increasingly locking in.”

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