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BoE Money & Credit Sept 22

ended 30. September 2022

This morning the Bank of England published its latest Money & Credit report. Key highlights were:

  • Net borrowing of mortgage debt by individuals increased to £6.1 billion in August, up from £5.1 billion in July, and remaining above its 12-month pre-pandemic average up to February 2020 of £4.3 billion.
  • Mortgage approvals for house purchases increased sharply to 74,300 in August from 63,700 in July. This is the highest level since January 2022 (74,500), and a notable rise following a downward trend over the previous several months.
  • The ‘effective’ interest rate – the actual interest rate paid – on newly drawn mortgages increased by 22 basis points to 2.55% in August.
  • Consumers borrowed an additional £1.1 billion in consumer credit, on net, a little below the additional £1.5 billion borrowed in July.

Any thoughts, send them across ASAP.

3 responses from the Newspage community

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Craig Fish
Director at Lodestone Mortgages
It's interesting to see that the number of house purchase approvals increased sharply in August, and I suspect this had a lot to do with people pre-empting more rate rises, and they weren't wrong based on everything that's happened this week. Effective interest rates will be an interesting gauge to watch over the coming months, following the sharp rate increases in September. On the ground though, despite the obvious worry over the future direction of interest rates, and strong demand from people who need to remortgage, we are still quite active in the 'purchase' market. There is still a significant lack of stock, and the stock that does come to market tends to disappear just as quickly. We have even heard the dreaded word 'gazumped' during this last week.
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Ashley Thomas
Director at Magni Finance
This latest data its largely irrelevant given the turmoil off the past week or so. Wait until you get the next report, and effective interest rates will be above 5% the way things is going, perhaps over 6%. Most rates are now at 5% with some lenders over 6%. It is going to be an extremely challenging time for a lot of people with rates at this level.
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Ricky Dosanjh
Director at Reeds Financial
We saw the largest rate rise in recent years on the 4th August of 0.50% which took the new rate to 1.75%. If you remember we started 2022 on 0.25% so we was going to start seeing an increase in net borrowing. Savvy homebuyers are pre-empting further increases and getting new mortgage applications in quickly. Only problem is that currently housing stock goes as quick as it comes on and I can't see that improving anytime soon. Homeowners are remortgaging early and paying exit charges to beat further rises. With everything around us continuing to rise in costs, securing the single largest expense is on the forefront on everyones mind. September's report will be interesting, with the new base rate of 2.25% and aftermath of the mini-budget.