UK mortgage borrowing remained strong at £5.2bn in January and households continued to pay off debt amid economic uncertainty, Bank of England figures showed.
The value of mortgages approved dipped from December’s figure of £5.6bn and the number of house purchase approvals fell to 99,000 from 102,800.
The figures were well above recent trends and indicated the start of a slowdown in a market fuelled by Chancellor Rishi Sunak’s stamp duty holiday for the first £500,000 of a property purchase. The tax break was due to finish at the end of March but Sunak is reported to be considering extending the deadline in his budget on Wednesday.
The monthly average for mortgage borrowing in the six months to February 2020 was £4bn and the average number of approvals in that period was 67,900.
Samuel Tombs, UK economist at Pantheon Macroeconomics, said: “Housing demand cooled in January, as the last few homebuyers who had a realistic chance of completing a transaction before the stamp duty threshold returns to £125K, from £500K, at the end of this month raced to proceed with purchases.”
Households paid £18.5bn into deposit-like accounts compared with an average £4.8bn in the six months to February 2020. The figure was probably supported by £3.5bn of withdrawals from National Savings accounts after rates were cut to near zero. Net consumer borrowing fell £2.4bn, the most since May and a bigger drop than the £2bn average analyst forecast.
People in work have saved money during the Covid-19 crisis with fewer options for spending during lockdowns and with economic uncertainty making households cautious. Non-financial companies repaid £1bn of bank loans in January led by large businesses.
