Mortgage approvals for house purchases decreased again in February as gains in consumer credit borrowing slowed down by £300m compared to January, the Bank of England said on Tuesday.
House buying appeared to slow down as lenders approved around 65,500 mortgages in February, compared to some 66,100 in January.
January saw a decrease of around 400 in mortgage approvals compared to the end of 2024.
The figure of around 65,500 approvals for February was smaller than what a Reuters poll of economists had predicted.
Borrowing of mortgage debt was £3.3bn, a decrease of £0.9bn compared to the previous month.
Consumer credit borrowing by individuals in February was £1.4bn while net borrowing through credit cards dropped to £0.8bn from £1.1bn.
The annual growth rate for all consumer credit was 6.4 per cent.
There was also a smaller gain in lending in sterling to private sectors companies and households in February, down to £5.1bn from £9.2bn in January.
The figures largely reflect the UK’s tricky financial circumstances as interest rates remain high and inflation continues to fly above the Bank of England’s 2 per cent target.
KPMG’s head of financial services Karim Haji said the fall in borrowing suggests that households continue to face the pressures of high costs.
“While falling inflation will bring some relief to households, there are challenging months ahead, with some utility costs rising by almost 50 per cent from April many households will feel the effects of the government’s spending cuts outlined in the Spring Statement, such as the reduction in welfare benefits,” Haji said.
“The surprising dip in mortgage approvals against a backdrop of lower inflation, interest and mortgage rates, and the upcoming Stamp duty increase, suggests that affordability continues to put pressure on household finances.
“High deposit requirements may also be impacting first-time buyers’ appetites,” Haji added.
UK economist at Capital Economics Ashley Webb pointed out the £1.4bn rise in consumer credit was higher than the average gain of £1.2bn over the previous six motnhs.
“This provides a glimmer of hope that households are starting to save a bit less and spend a bit more freely,” Webb said.
“Today’s data release suggests households may be starting to become a bit more inclined to spend more and save less.”
