29th Oct 2025 09:51
(Alliance News) - Mortgage borrowing in the UK rose to its highest level in six months in September, Bank of England data showed on Wednesday, as lower interest rates supported housing market activity.
According to the Bank's latest Money & Credit report, net borrowing of mortgage debt by individuals increased to GBP5.5 billion in September, up from GBP4.3 billion in August and the strongest monthly total since March 2025, when it reached GBP13.2 billion.
The annual growth rate for net mortgage lending accelerated to 3.2% from 3.0% in August, marking its highest since January 2023. Gross lending rose to GBP24.9 billion from GBP23.0 billion, while repayments edged up slightly to GBP20.3 billion from GBP20.0 billion.
Net approvals for house purchases, which can be used as an indicator of future borrowing, rose modestly to 65,900 from 64,900 in August, but above the FXStreet-cited market consensus of 64,500 approvals for the month of September.
Approvals for remortgaging with a different lender fell to 37,200 from 37,800.
The effective interest rate on newly drawn mortgages declined by seven basis points to 4.19%, the lowest level since January 2023, extending a downward trend that began in March.
The rate on outstanding mortgage stock was steady at 3.89%.
Meanwhile, UK consumer borrowing declined during the month. Net consumer credit rose by GBP1.5 billion in September, down from GBP1.7 billion in August.
Within that, credit card borrowing was little changed at GBP700 million, while other forms of consumer credit such as personal loans and car finance fell to GBP800 million from GBP1.0 billion.
The annual growth rate for all consumer credit ticked higher to 7.3% from 7.2%. Credit card borrowing growth accelerated slightly to 11%, while other unsecured lending eased to 5.7%.
UK households continued to increase their savings. Deposits with banks and building societies rose by GBP7.9 billion in September, driven by GBP5.8 billion of inflows into interest-bearing sight accounts and GBP2.4 billion into ISAs.
Companies also built up cash reserves, depositing a net GBP8.7 billion with banks and building societies during September, following net withdrawals of GBP2.8 billion in August.
In aggregate, the net flow of sterling money, known as M4ex, rose to GBP13.7 billion in September from GBP11.2 billion in August, driven by households' higher deposits.
By Eva Castanedo, Alliance News reporter
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