"After the rush to meet the stamp duty deadline, we were inevitably going to reach a period of calm, as the urgency to move has been removed somewhat."
Net repayments are relatively rare, with only one other repayment (in April 2020) in the past decade. The net repayment in July followed record borrowing in June (£17.7 billion), which was likely boosted by the initial tapering off of the stamp duty holiday.
Gross lending fell to its lowest since June 2020, at £16.5 billion, and was a little below the twelve month average, at £18.1 billion.
Approvals for house purchases decreased further in July to 75,200. This is the lowest since July 2020, but remains above pre-February 2020 levels. Approvals for remortgaging with a different lender rose to 37,400 in July, from 35,800 in June. However, the Bank says this remains low compared to the months running up to February 2020.
John Phillips, national operations director at Just Mortgages, said: “After the rush to meet the stamp duty deadline, we were inevitably going to reach a period of calm, as the urgency to move has been removed somewhat.
“There is still plenty of desire to buy properties however, as although approvals for house purchases dipped in July, they were still above the pre-pandemic average.
“Those who are looking to move are benefiting from lenders’ incredibly low rates, and competition between lenders may see these rates continue to fall.
“The summer months are traditionally quieter for purchases, however the number of remortgages should spike. There was a small increase from June to July, and this trend should continue for the rest of the year as mortgages reach maturity.”
Tomer Aboody, director of property lender MT Finance, commented: "Borrowers repaid £1.4 billion of mortgage debt on net in July, following June’s record month of borrowing where borrowers attempted to take advantage of the maximum stamp duty holiday saving. Gross lending fell to its lowest level since June 2020, while approvals for house purchases decreased to 75,200. This slowing down and recalibrating of the market is to be expected, particularly with the onset of the summer holidays and many people keen to get away for a much-needed break.
"Confidence remains strong, however, particularly as borrowing rates remain low. With the effective rate on new mortgages decreasing by 12 basis points to 1.83 per cent in July, borrowers are finding that the dream home they may not have been able to afford before is now within reach. The continued lack of stock is the issue for many as we head into autumn, as without some sort of extended stamp duty holiday for downsizers there is little incentive for older homeowners to move to a smaller property and free up family homes."
