Consumers repaid £2.4bn of credit in January, which is the largest net repayment since May 2020, according to Bank of England data.
The central bank said the mass repayment trend, shown in its latest Money and Credit report, reflects lower levels of new borrowing and as a result, the annual growth rate in consumer credit borrowing fell further to -8.9%, a new series low since it began in 1994.
Within consumer credit, weaker growth in borrowing levels primarily reflected net repayments on credit cards (£2.2bn) with some repayments of other forms of consumer credit reaching £200m.
Net mortgage borrowing remained robust at £5.2bn in January. There were 99,000 mortgage approvals for house purchase in January, in line with the average of 100,000 since October 2020. Effective interest rates on new mortgage borrowing fell to 1.85%.
The data revealed that the mortgage market remained relatively strong in January. Individuals borrowed an additional £5.2bn secured on their homes, compared to the monthly average of £4bn in the six months to February 2020.
John Phillips, national operations director at Just Mortgages and Spicerhaart, explained how Brexit appears to have had a negligible impact on the mortgage market as approvals remained robust in January.
He said: “The strength of borrowing demonstrates how the market is still defying the wider economic situation. With another lockdown imposed, savings for those lucky enough to still be in employment are rising, and faced with more time at home, there will be more and more people considering a move.
“With rumours of government backed 95% LTV mortgages, a potential three-month extension to the stamp duty holiday and the rollout of the vaccine, the mortgage market should continue to be the shining beacon of hope for the economy in 2021.”
John Goodall, chief executive at Landbay, said: “Although mortgage approvals are down slightly in January from December they are on par with the highs of 2008 just before the global financial crisis. Mortgage borrowing is also high for January, again buoyed by the stamp duty holiday.”