The Bank of England’s later Money and Credit Report, covering May 2022, has reported that net borrowing of mortgage debt by individuals increased to £7.4 billion in May, up from £4.2 billion in April to sit above its 12-month pre-pandemic average up to February 2020 of £4.3 billion.
Consumers borrowed an additional £0.8 billion in consumer credit, on net, of which £0.4 billion was new lending on credit cards.
Large non-financial businesses’ repaid £1.9 billion of bank loans in May compared to £2.6 billion borrowing in April. Small and medium sized businesses repaid £0.2 billion of bank loans in May, less than the £0.5 billion repaid in April and the 15th consecutive month of net repayments. Private non-financial companies (PNFCs) redeemed £5.1 billion in net finance from capital markets.
The net flow of sterling money (known as M4ex) increased to £20.3 billion in May compared with £1.8 billion in April. Households’ holdings of money saw net flows of £5.4 billion in May, compared with £5.7 billion in April.
The net flow of sterling lending to private sector companies and households (known as M4Lex) increased to £13.0 billion in May, compared to -£3.3 billion in April.
Lisa Martin, development director at TMA Club, said: “Today’s figures reflect a resilient mortgage market. Recent interest rate hikes and the cost-of-living crisis are likely to be influencing a more cautious approach by lenders, but approvals for house purchases rose slightly to 66,200 in May, from 66,100 in April. Conversely, with the recent spike in mortgage maturities and, again, rising rates, it’s no surprise to see remortgage approvals rise to 78,800, from 47,800 in April.
“As prices are likely to continue to rise throughout the year, customers will be looking to brokers to act swiftly to secure the best deals and lock into fixed rates before mortgages are replaced or pulled from the market.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “Mortgage approvals are generally a good indictor of market direction and these, like the Nationwide figures yesterday, show that you write the property market off at your peril.
“What’s happening on the ground is that buyers and sellers are inevitably more cautious bearing in mind steep rises in the cost of living and interest rates with probably worse to come.
“Nevertheless, we are seeing few attempts at renegotiation or withdrawal as buyers know in particular the continuing shortage of stock means there will be little alternative. Therefore, we don’t expect to see a sharp correction in prices but they are already rising more slowly than they have been and certainly transactions are taking longer as there is less competition.”