Latest Bank of England data showed that net borrowing of mortgage debt fell by £200 million month-on-month to £4.3 billion in August. This came after a £900m decrease to £4.5bn in July.

Mortgage approvals fell last month as uncertainty hit one of the key indicators in the property market. Mortgage approvals for house purchases decreased by 500 in August, to 64,700. Approvals for remortgaging decreased by 900 in August, to 37,900.

Separately, borrowing of consumer credit by individuals remained flat at £1.7 billion in August. Within this, net borrowing through credit cards slightly decreased to £0.7 billion in August, from £0.8 billion in July. Net borrowing through other forms of consumer credit slightly increased, to £1.0 billion from £0.9 billion.

Sarah Coles, Head of Personal Finance from Hargreaves Lansdown said “Mortgage approvals stumbled slightly, after a positive few months. This isn’t a massive shift, and doesn’t deviate enormously from the previous 12-month average, but the direction of travel is important.

“Worries about the wider world, weakness in the jobs market, relatively sticky mortgage rates and higher house prices have dampened buyers’ enthusiasm. This has been reflected in fewer new buyers gracing the doorsteps of estate agents, spelling a sluggish few months for the property market. None of these factors are expected to alter significantly in the months to come, and when you add in all the uncertainty around the forthcoming Budget, and the usual winter slowdown, things aren’t looking massively optimistic for the property market.

“First-time buyers have their work cut out for them while prices and mortgages remain higher. The latest HL Savings & Resilience Barometer shows that homeowners under the age of 30 have average monthly mortgage payments of £805 a month. They face spending a much heftier proportion of their income on keeping a roof over their head than older owners. It means it’s worth doing what you can to boost your deposit, and keep monthly payments to a minimum. If you have a Lifetime ISA, maxing out your contributions for this year could mean an extra £1,000 top up from the government. If you don’t have a LISA, and you qualify for one, then if you have at least a year until you plan to buy – and you aim to buy something worth £450,000 or less – this could be your opportunity to take advantage.”

Source: Credit Connect