Individuals borrowed £9.5bn of mortgage debt on net in September, according the Bank of England’s (BoE) Money and Credit report.
This was a rise from £4.4bn in August, and the highest figure since June 2021, when net borrowing reached a record of £17.1bn.
The BoE said September’s increase was driven by borrowing ahead of the complete tapering off of lower stamp duty from October.
The net borrowing in September was £2.9bn above the 12 month average to June 2021, when the full stamp duty holiday was in effect.
Gross lending increased sharply to £30.7bn in September, from £20.9bn in August.
Gross repayments also increased to £20.7bn from £17.7bn in August.
Mortgage approvals for house purchase fell to 72,600 in September, from 74,200 in August.
This was the lowest since July 2020, but remained above pre-February 2020 levels.
Approvals for remortgaging – which only capture remortgaging with a different lender – rose slightly to 41,500 in September.
This was low compared to the months running up to February 2020, but was the highest figure since March 2020.
The ‘effective’ interest rate – the actual interest rate paid – on newly drawn mortgages fell 4 basis points (bps) to 1.78% in September.
That was below the rate in January 2020 (1.85%) and the series average since March 2020 (1.83%).
The rate on the outstanding stock of mortgages ticked down 1bps to a series low of 2.04%.
Consumers borrowed an additional £0.2bn in consumer credit, on net.
Households deposited an additional £9.4bn with banks and building societies in September, compared to an average net flow into banks and building societies of £8.9bn between April and August 2021.
The September flow remained relatively strong when compared to pre-pandemic levels: in the year to February 2020, the average inflow was £4.7bn.
Deposit interest rates in September were broadly unchanged and remained at historically low levels.
Toni Smith, chief operating officer at PRIMIS, said: “Today’s figures highlight the ongoing strength of our housing market.
“Whilst the September numbers were likely boosted by the extended stamp duty holiday, the drivers motivating people to buy or move home remain strong.
“However, as we start to see an increase in the cost of living and a potential rate rise looming, many households will find their finances squeezed.
“Within this context, the role brokers play in supporting their customers to access the best possible deal for their circumstances will be vital.
“With the last quarter of the year also set to bring a surge in remortgage activity, there is huge opportunity for those brokers proactively having conversations with their clients.
“As borrowers across the country look at their refinancing options, having the support of a broker who can guide them to a product that suits their specific needs, will be invaluable – and it will likely further strengthen their relationship with the broker for years to come.”
Steve Seal, CEO of Bluestone Mortgages, said: “It’s been reassuring to see confidence in the housing market again after many months of uncertainty.
“However, with the likes of the stamp duty holiday and furlough scheme having recently ended, and [the] Budget quite light touch on housing, we may see more borrowers plunge into difficult financial situations and, who as a result, will likely be turned away by the mainstream mortgage market.
“As the number of disenfranchised customers continues to rise, we, as an industry, should be prepared to support them in any way that we can by signposting them to the lending options that are catered to their unique needs.
“It’s our moral responsibility to help those who are traditionally underserved to move onto or up the property ladder and give everyone equal access and opportunity to be able to purchase their dream home.”
Stuart Wilson, corporate marketing director at more2life, said: “September marked a continuation of one of the busiest periods that many advisers and lenders have seen for a long time, fuelled by the stamp duty holiday.
“Following the record highs in the summer, mortgage approvals and net mortgage borrowing have thus far remained strong, with many pushing on with their plans regardless of their ability to exchange before the tax break ended in September, due to having already incurred costs or pressing lifestyle needs.
“The later life lending market also performed well in September, with product choice hitting an all-time high and total lending in Q3 up by almost a fifth (19%) on the same quarter a year ago.
“The stamp duty holiday has been instrumental in raising awareness of the option to use equity release to fund a house purchase and we are confident that borrowers will continue to pursue this option long into Q4 and beyond.
“As such, it is vital that advisers are well-informed about their clients later life lending options and are prepared to support a growing number of customers in this demographic.”