The Bank of England has reported that net borrowing of mortgage debt by individuals decreased from £1.1 billion in August to -£0.9 billion in September, the lowest since April 2023.

Net mortgage approvals for house purchases fell to 43,300 in September, the lowest level since January 2023. Net approvals for remortgaging fell to 20,600 in September, the lowest level since January 1999.

The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages saw a 19 basis point increase and now sits at 5.01%.

Net borrowing of consumer credit by individuals amounted to £1.4 billion in September, down from £1.7 billion in the previous month.

Households withdrew £0.7 billion from banks and building societies in September. This was driven by net outflows from interest-bearing and non-interest bearing sight deposit accounts of £6.2 billion and £2.8 billion respectively. These were partly offset by net flows of £5.3 billion into time deposit accounts, which were down from inflows of £8.0 billion in August.

Steve Seal, CEO, Bluestone Mortgages, said: “Following a sharp fall in consumer confidence, it’s no surprise that mortgage approvals have sunk as consumers continue to battle affordability challenges. However, with expectations for homebuyer and homeowner support in the upcoming Autumn Statement, this could signal that hope is on the horizon.

“For those worrying about how they can take their first or next steps onto the property ladder in the current inflationary environment, now is the time to speak with a mortgage broker. These professionals have a key role to play in signposting potential and existing borrowers to the best available options for their unique circumstances so that they, too, can achieve their homeownership dreams.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “Although mortgage payments and inflation may be nearing, or at, their peak, neither are falling fast enough to correct the reduction in activity over the past few months.

“Like buyer enquiries and property appraisals, mortgage approvals help to understand the direction of travel for the market and determine whether prospective purchasers take the plunge.

“The increase in effective interest rates and the shortage of stock are continuing to result in a flattening, rather than a significant reduction, in sales.”