UK Mortgage Borrowing Drops to 4.3 Billion Pounds in July as House Purchase Approvals Fall
Net mortgage borrowing by individuals in the United Kingdom fell to 4.3 billion pounds in July, down from 7.7 billion pounds in June, the Bank of England said in its Money and Credit statistical release published on 1 September 2026. The figure came in below the previous six month average of 5.3 billion pounds, according to the Bank.
Mortgage Lending and Approvals Soften
The Bank reported that net mortgage approvals for house purchases, an indicator of future borrowing, fell to 56,100 in July from 58,200 in June, also below the roughly 60,800 average recorded over the prior six months. Approvals for remortgaging with a different lender rose to 34,500 in July from 34,100 in June, the Bank said. Secured gross lending eased to 25.9 billion pounds in July from 26.9 billion pounds in June, while repayments edged up to 21.3 billion pounds from 21.2 billion pounds. The annual growth rate for net mortgage lending held steady at 3.6 percent in July, the Bank noted. The effective interest rate on newly drawn mortgages rose to 4.45 percent in July from 4.35 percent in June, while the rate on the outstanding stock of mortgages ticked up to 3.97 percent from 3.96 percent.
Consumer Credit Borrowing Edges Higher
Net consumer credit borrowing rose slightly to 2.0 billion pounds in July from 1.9 billion pounds in June, slightly above the six month average of 1.9 billion pounds, the Bank said. Within that total, credit card borrowing fell to 0.9 billion pounds from 1.0 billion pounds, while other forms of consumer credit, such as car dealership finance and personal loans, rose to 1.1 billion pounds from 0.9 billion pounds. The annual growth rate for all consumer credit increased slightly to 9.2 percent in July from 9.1 percent in June, with credit card borrowing growth unchanged at 12.5 percent and other consumer credit growth rising to 7.7 percent from 7.6 percent, the Bank reported.
Money Supply Turns Negative
The net flow of sterling money, known as M4ex, decreased to negative 10.1 billion pounds in July from a positive 15.5 billion pounds in June, the Bank said. Non-intermediate other financial corporations reduced their money holdings by 14.0 billion pounds, partially offset by households and private non-financial corporations increasing holdings by 3.8 billion pounds and 0.1 billion pounds respectively. The annual growth rate of M4ex slowed to 4.3 percent in July from 4.9 percent in June. Separately, the flow of sterling net lending to private sector companies and households, known as M4Lex, fell to 0.0 billion pounds in July from 39.1 billion pounds in June, with households and businesses borrowing 5.1 billion pounds and 1.9 billion pounds respectively, offset by repayments from non-intermediate other financial corporations of 7.0 billion pounds. On our calculation, the drop in net mortgage borrowing from 7.7 billion pounds in June to 4.3 billion pounds in July represents a decline of roughly 44 percent month on month.
Why it matters: The combination of weaker net mortgage borrowing, fewer house purchase approvals and higher effective mortgage rates points to softer UK mortgage-market activity, even as consumer-credit borrowing increased modestly. Slower mortgage lending and approvals typically feed through to softer housing transactions and price growth in the months ahead. The negative M4ex flow is worth reading carefully rather than at face value: it was driven by non-intermediate other financial corporations reducing their money holdings by 14.0 billion pounds, which, after being partly offset by increases from households and private non-financial corporations over the same month, produced the negative 10.1 billion pound headline flow, so the underlying move reflects a shift within the financial sector rather than households or businesses broadly pulling back.
Outlook: Attention now turns to whether the softer mortgage and approvals figures persist into August, alongside the effective mortgage rate, which rose again in July to 4.45 percent. The Bank’s next Money and Credit release is due on 30 September 2026, and its Monetary Policy Committee is next scheduled to announce a Bank Rate decision on 17 September 2026, with Bank Rate currently held at 3.75 percent.
Source: Bank of England
