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UK mortgages hit highest level since June

According to data from the Bank of England, the total number of mortgage approvals for home purchases fell to 72,600 last month, from 74,200 in August. Photo: PA

The British borrowed £ 9.5 billion ($ 13.1 billion) in mortgage debt in September, the highest level since June.

The figure is above the £ 6.8bn average over the past six months, as potential owners rushed to close deals before the stamp duty holiday was reduced, and eventually liquidated late September.

According to the latest data from the Bank of England (BoE), the total number of mortgage approvals for home purchases, an indicator of future borrowing, fell to 72,600 last month, from 74,200 in August .

However, this was still higher than pre-COVID levels in February 2020.

Approvals for remortgaging, which includes remortgaging with another lender, edged up to 41,500 in September. This remains low compared to the months up to February 2020, but it is the highest since March 2020.

Graphic: Bank of England

Potential owners rushed to close deals before the stamp duty holiday was reduced and were finally liquidated in late September. Graphic: Bank of England

“This will likely be the last set of figures from the Bank of England where the effective interest rate on new mortgages drops, as several lenders, including Barclays, HSBC, NatWest and TSB, have all raised their prices in anticipation of ‘a base rate. increase next week, ”said Mark Harris, managing director of mortgage broker SPF Private Clients.

“Whether base rates go up or not, mortgage rates have started to rise as markets have already forecast a rate hike, and maybe two or three more by the end of next year.”

Traders are betting Threadneedle Street will start raising interest rates from their all-time low as early as next month, with benchmark rates expected to hit 1.25% by the end of next year.

Low rates have helped to increase demand in the UK property market, with house prices rising in most parts of the country.

Read more: UK house prices could rise as fewer properties hit the market

Laura Suter, head of personal finance at investment brokerage AJ Bell, said: “Homeowners need to be aware that this is not about an interest rate hike now and time is running out with rates. record mortgages that we all get used to.

Friday’s report also showed consumers borrowed an additional £ 200million. Credit card loans increased by almost £ 600million, marking the highest level of net borrowing since July 2020.

Individuals have also repaid £ 400million from other forms of consumer credit, such as car dealer financing and personal loans. This is the first net repayment since February 2021, according to the figures.

The effective rate on new personal loans rose to 6.02% in September, the highest since March 2020 but still below the January 2020 level.

Read more: UK average credit card spending at highest level in 8 years

Household net flow to deposit accounts fell last month to £ 9.4bn, while interest rates on deposits in September were broadly unchanged and remained at historically low levels. The effective interest rate on interest-bearing overdrafts in September increased by 8 basis points to 20.74%.

The BoE added that large companies borrowed £ 1bn in loans from banks in September, while small and medium-sized businesses repaid £ 1.4bn.

Private nonfinancial companies bought back £ 1.9bn of net funding in the capital markets in September, compared to an average net issuance of £ 900m in the twelve months to August.

Watch: Should I pay off my debts or save money during the coronavirus pandemic?

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