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Bank of England Money & Credit

ended 30. August 2022

Any thoughts on the Bank of England data below published just now? Deadline is ASAP. Key points below.

  • Net borrowing of mortgage debt by individuals decreased slightly to £5.1 billion in July, from £5.3 billion in June (Chart 1). This is above the pre-pandemic average of £4.3 billion in the 12 months up to February 2020. Gross lending increased to £26.1 billion in July from £24.6 billion in June, and gross repayments increased to £20.8 billion, from £19.4 billion. Approvals for house purchases, an indicator of future borrowing, increased slightly to 63,800 in July, from 63,200 in June, which is below the 12-month pre-pandemic average up to February 2020 of 66,800. Approvals for remortgaging (which only capture remortgaging with a different lender) increased to 48,400 in July, from 43,300 in June. This also remains below the 12-month pre-pandemic average up to February 2020 of 49,500, however.
  • Individuals borrowed an additional £1.4 billion in consumer credit in July, on net, following £1.8 billion of borrowing in June (Chart 2). This is above the 12-month pre-pandemic average up to February 2020 of £1.0 billion. The additional consumer credit borrowing in July was split between £0.7 billion on credit cards, and £0.7 billion through other forms of consumer credit (such as car dealership finance and personal loans). The annual growth rate for all consumer credit increased to 6.9% in July; the highest rate since March 2019 (7.2%). The annual growth rate of credit card borrowing was 13.0%, while other forms of consumer credit was 4.5%. These were the highest rates since October 2005 (13.7%) and March 2020 (5.6%) respectively.

3 responses from the Newspage community

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Rhys Schofield
Brand Director at Peak Mortgages and Protection
All the data points to the fact that it's rather busy. July and August are always quieter on purchase work but remortgage enquiries went through the roof. We saw our remortgage enquiries online increase by 227% in August alone as people looked to consolidate debt or secure a new fixed rate to protect against future rate rises.
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Graham Cox
Director at Bridging Hub
These latest Bank of England figures show credit card debt increasing at the fast rate since 2005 as the cost of living crisis takes hold. What's alarming is we've yet to face the worst of it, with energy prices for individuals and businesses set to go through the roof. Mortgage approvals are still strong, just shy of pre-pandemic 2020 figures, but these numbers really reflect people applying for a mortgage in the spring. I expect transaction levels to tail off considerably over the coming months and even next spring, as the full force of rising costs strangles demand.
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Marcus Wright
Managing Director at Bolton Business Finance
The increase in consumer credit borrowing is likely just the start of a massive increase in personal debt, caused by soaring energy bills and other increasing prices. With a long recession being predicted throughout 2023, I expect this will increase further. While the housing market is still looking resilient for now, it takes longer for changes to the base rate and other economic factors to have an effect. However its likely mortgage borrowing will start to decrease heading into winter as the cost of living crisis starts to bite and potential further base rate increases slow down the property market.