British homebuyers borrowed more in new mortgages in January than in any month since September 2022, while mortgage approvals declined slightly but remained stronger than expected,
according to data from the Bank of England released on Monday.
Net mortgage lending jumped to £4.21 billion ($5.31 billion) in January, up from £3.34 billion in December, marking the highest level since the market turbulence triggered by former Prime Minister Liz Truss’s economic policies. Economists polled by Reuters had predicted lending would reach £3.55 billion, making January’s figure a notable surprise.
Meanwhile, mortgage approvals for home purchases—a key indicator of future lending—fell marginally to 66,189 from 66,505 in December. This drop was smaller than the decline to 65,650 that economists had anticipated.
The approaching end of a temporary stamp duty land tax reduction, which benefits first-time buyers and purchasers of lower-priced properties, likely contributed to increased activity in the housing market.
“Lower mortgage interest rates, rising real wages, and a rush to beat changes to stamp duty in April supported net new mortgage approvals in January,” said Rob Wood, chief UK economist at Pantheon Macroeconomics.
However, Wood cautioned that the boost from stamp duty changes may have peaked, suggesting that mortgage approvals could slow in the coming months.
Other housing market indicators, including house price data from Nationwide and the Royal Institution of Chartered Surveyors, suggest property prices are beginning to rise.
Consumer Credit Sees Biggest Jump in a Year
Additional data from the BoE indicated that consumer demand picked up in January, aligning with official retail sales figures that signaled stronger spending despite an overall sluggish economic backdrop.
Annual consumer credit growth slowed slightly to 6.4% in January from 6.5% in December, the lowest rate since May 2022. However, in cash terms, consumer credit rose by a net £1.74 billion in January—up from £1.06 billion in December—marking the largest monthly increase in a year and surpassing Reuters’ consensus forecast of £1.2 billion.