Mortgage borrowing rebounds in December – BoE

Rise in approvals and lending signals renewed market activity

Mortgage borrowing rebounds in December – BoE

Mortgage borrowing in the UK increased by £1 billion in December, bringing total net borrowing to £3.6 billion, according to the latest figures from the Bank of England (BoE).

The increase in mortgage borrowing follows a £0.9 billion decline in November, signalling a rebound in mortgage activity.

Annual growth rate for net mortgage lending climbed to 1.5% in December, up from 1.3% the previous month. This marks a continuation of the upward trend seen since April 2024.

The BoE’s Money and Credit report also revealed that an increase of gross lending to £21.3 billion in December from £20.8 billion in November. Gross repayments also increased to £18.5 billion from £18.1 billion.

Mortgage approvals, which serve as an indicator of future borrowing, also showed signs of improvement. Net approvals for house purchases rose by 500 to 66,500 in December, partially reversing a decline of 2,300 in November. However, approvals for remortgaging — capturing only those switching lenders — fell by 700 to 30,500, marking the second consecutive monthly drop.

Interest rates on newly drawn mortgages edged down by three basis points to 4.47% in December, the lowest level since April 2023. Meanwhile, the average rate on outstanding mortgages remained stable at 3.79%.

“It’s encouraging to see the mortgage market end 2024 on a high, despite the usual Christmas market slowdown,” commented Mark Hollands (pictured left), head of sales and distribution at Bluestone Mortgages. “As 2025 gets underway, we hope to see demand continue to climb as consumers look to get ahead of the incoming Stamp Duty changes.”

Felicity Holloway (pictured centre), head of mortgages at Moneybox, echoed Hollands’s sentiment, saying that the festive season did little to distract people from their homeownership goals last month.

“Prospective homeowners defied the usual winter slowdown in December, with the latest statistics indicating a surge in activity,” she noted. “This increase in mortgage approvals is likely a direct response to the stamp duty changes coming in April.”

Tony Hall (pictured right), head of business development at Saffron for Intermediaries, meanwhile pointed to a potential shift in market conditions.

“With inflation easing to 2.5%, slightly lower than in November, there’s growing anticipation that if it follows this downward trajectory, a base rate cut could be on the horizon,” Hall said. “This would mark a shift that would create much more favourable conditions for prospective buyers and drive an increase in mortgage lending and approvals.

“Right now, lenders are limited in how much of their lending can go beyond 4.5 times income, which blocks many buyers who can clearly afford higher multiples. More flexibility would help lenders say yes to the right cases, but it’s important to avoid the mistakes of the pre-financial crash era.” 

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