Net borrowing of mortgage debt rose to the highest level since March this year, money and credit statistics published by the Bank of England have shown, in signs that Brits are rushing to buy homes before any new property taxes are announced at the Budget.
Net borrowing rose by £1.2bn to £5.5bn while mortgage approvals for house purchases also inched up in September to 65,900, continuing a trend of increases this year.
The figures indicate that the housing market is holding steady despite fears of planned property taxes in the Autumn Budget, according to analysts.
Nathan Emerson, the chief executive of Propertymark, said that the uplift in mortgage approvals is an encouraging sign that Budget fears are not slowing housebuying.
“Many cogs need to turn harmoniously together when it comes to consumer confidence and affordability, and despite challenges within the wider economy, it is positive to see people being able to take their next step onto the housing ladder with greater ease,” Emerson said.
But approvals for remortgaging fell by 600 to 37,200 in September while the ‘effective’ interest rate on new mortgages fell by 7 per cent.
Alice Haine, personal finance analyst at Bestinvest, says that this modest mortgaging data shows that buyers fear further Treasury raids on property.
“With fears mounting that the Chancellor may introduce further property tax reforms, the market is stuttering as buyers and sellers pause moving plans and wait to see what unfolds,” she said.
Budget taxes could ‘dampen activity’
The annual growth rate of borrowing by large businesses fell from 8.7 per cent in August to 8.3 per cent in September.
The borrowing growth rate for small and medium-sized firms (SMEs) increased from 1.3 per cent to 1.6 per cent in the same period, the highest rate since August 2021.
Net borrowing of consumer credit by individuals was largely unchanged on recent trends at £1.5bn in September, down from £1.5bn in August.
Alex Kerr, an economist at Capital Economics, says that households aren’t reigning in spending due to fears about tax rises.
The amount of money in households’ bank accounts increased by £7.9bn in September, with households depositing £5.9bn in interest-bearing deposit accounts, and £2.4bn into ISAs.
Kerr says that this behaviour is due to households shifting where they hold their money, rather than an increase in precautionary savings.
“The risk is that tax rises on households in the Budget dampen activity next year,” Kerr added.