Mortgage borrowing dips below pre-pandemic averages: BoE

This is below the pre-pandemic average of £4.2 billion in the 12 months up to February 2020.

Gross lending fell to £21.7 billion in December, from £22.4 billion in November, while gross repayments fell from £19.4 billion to £18.1 billion.

Mortgage approvals for house purchase increased slightly to 71,000 in December, above the 12-month average up to February 2020 of 66,700.

Approvals for remortgaging with a different lender also rose slightly to 44,900. This remains low compared to the 12-month average up to February 2020 of 49,500, but is the highest since February 2020 (52,500).

Steve Seal, CEO of Bluestone Mortgages, commented: “Today’s figures are hardly surprising given the current inflationary environment. Affordability concerns will continue to be at the forefront of consumers’ minds given soaring energy bills, rising inflation and the upcoming increase to National Insurance contributions.

“We’re already seeing high street lenders tightening their lending criteria, and as a result, we can expect a growing number of people to be locked out of the mainstream mortgage market."

Emma Hollingworth, distribution director at MPowered Mortgages, said: “Today’s statistics are indicative of the months following the conclusion of the stamp duty holiday in September. The market witnessed unprecedented levels of activity throughout 2021 – boosted by government support – but these December figures demonstrate that the year ended on a quieter, and more stable note.

“However, as we start to see an increase in the cost of living and another potential rate rise looming, many households will find their finances squeezed. Those looking for a suitable and affordable mortgage product will need a quick and certain answer to what mortgages are available to them."

Dave Harris, CEO of more2life, added: “Today’s figures suggest that December provided a quieter end to what had been a busy and turbulent year for the residential property market. Fuelled by the stamp duty holiday, we saw house prices climb as demand outstripped supply – especially for first or second time buyer properties.

“With gifting high on the agenda for over-55s, we also saw the later life lending market grow with the Equity Release Council highlighting that £4.8million had been released by new and returning customers in FY 2021. And the market’s growth wasn’t just limited to the amount of equity released – average loan sizes and the number of products in the sector both grew noticeably in 2021.

“As we look ahead to 2022, the industry needs to focus on continuing to build this momentum by creating greater awareness and education around such products, among both advisers and borrowers.”