Mortgage approvals slump as consumer credit soars

The number of people taking out a mortgage fell to its lowest level in August since January 2015, but consumer credit has soared, according to a report by high street banks.

Figures from the British Bankers Association (BBA) showed a total of 36,997 homeowners had their mortgages approved last month, the lowest figure this year, and a drop of 21% on August 2015.

The introduction of a rise in stamp duty in April, followed by the EU vote, has triggered uncertainty in the property market, and led to a slowdown in growth.

"Mortgage borrowing is growing at a slower pace than it has for the last few months, reflecting both the slowdown in housing market growth," said BBA chief economist Rebecca Harding.

However, consumer credit has soared by 6.4% over the year to August.

Driven by ultra-low interest rates, people are borrowing more on credit cards and through loans and overdrafts.

"Given the low interest rate environment and high levels of confidence during the summer, the strong credit growth can be interpreted as strong consumer sentiment," said Dr Harding.

Economists say it is still too early to see how the Bank of England's decision to slash interest rates has impacted the housing market.