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In January 2025, UK mortgage lending surged to GBP 4.207 billion, the highest since September 2022, surpassing expectations. However, mortgage approvals fell slightly to 66,189, indicating a potential slowdown ahead. The rise in lending was partly driven by the upcoming end of a stamp duty tax break, prompting increased home purchases. House prices continue to trend upward, as reported by Nationwide and the Royal Institution of Chartered Surveyors. Meanwhile, consumer credit rose by GBP 1.74 billion, the largest increase in a year, reflecting higher household spending. The data signals strong lending but potential moderation ahead.
In January, British homebuyers borrowed the highest amount in new mortgages since September 2022, while mortgage approvals declined slightly. According to data from the Bank of England (BoE), net mortgage lending increased to GBP 4.207 billion (USD 5.31 billion) from GBP 3.343 billion in December. This was the highest level recorded since the economic turmoil in September 2022, caused by the financial plans of former Prime Minister Liz Truss, which had unsettled bond and mortgage markets. Advertisement
The lending figure for January surpassed economists' expectations, as a Reuters poll had predicted GBP 3.55 billion in new lending. Meanwhile, mortgage approvals for house purchases, considered a key indicator of future lending, fell slightly to 66,189 from 66,505 in December. This decline was smaller than anticipated, as forecasts had suggested a drop to 65,650.
The upcoming end of a temporary reduction in stamp duty land tax for first-time homebuyers and those purchasing lower-priced properties is believed to have contributed to the increased mortgage activity.
Several housing market indicators have suggested a rise in house prices. Reports from mortgage lender Nationwide and the Royal Institution of Chartered Surveyors have shown an upward trend in property values.
In addition to mortgage data, other BoE statistics reflected a moderate increase in consumer demand. Annual consumer credit growth slowed to 6.4% in January, compared to 6.5% in December, marking the lowest rate since May 2022. However, in cash terms, consumer credit saw a significant increase, rising by GBP 1.740 billion in January from GBP 1.062 billion in December. This was the largest monthly increase in a year and exceeded the Reuters poll estimate of GBP 1.2 billion.
The latest data suggests that while mortgage lending remains strong, the effect of the stamp duty tax break is fading, which could slow approvals in the coming months. Additionally, the increase in consumer credit may indicate a rise in household spending despite broader economic concerns.
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