Mortgage lending brake

Gross lending tumbled to £19.3 billion last month from £30.7 billion in September, while total repayments fell to £18.2 billion from £20.6 billion.

Net borrowing using mortgage debt tumbled to £1.6 billion in October, down from £9.3 billion in the previous month, according to the Bank of England. However, deposits with banks, building societies and National Savings and Investments rose by £6.4 billion in October, compared with an average of £11.9 billion in the 12 months to September.

The lending figure was the lowest since July when borrowers repaid £2.2 billion of their mortgage debt and were driven by homeowners bringing forward borrowing to September to take advantage of a reduction in stamp duty on higher-priced properties. Net borrowing in October was £4.6 billion below the 12-month average for the period when the full stamp duty holiday was in effect.

Mortgage approvals for house purchase — a gauge of future borrowing — fell to 67,200 last month, compared with 71,900 in September and the lowest level since June last year.

According to Nationwide, the building society, the average house price in the UK topped £250,000 for the first time last month.

Since the summer of last year, the housing market has been booming, and the Treasury’s announced that the first £500,000 of a property purchase would be tax-free. As a result, consumer credit rose by £700 million in October, with the effective rate on new personal loans rising to 6.27 per cent, the highest level since March last year.

Mortgage lending fell sharply last month after the government withdrew a tax break that had helped to support the property market during the pandemic.

Summarised www.sba.tax

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