In contrast to the sharp growth on mortgage borrowing, UK credit card and other consumer borrowing has fallen during the COVID-19 pandemic.
Recent data from the Bank of England (BoE) illustrates a stark contrast in borrowing trends fuelled by the pandemic.
Households saving more and paying off debts
This shows consumer debts have dropped 5.6% over the past year - the lowest since the central bank began recording the data in 1994. Their data indicates that households are saving more and over £400m was paid off in credit card debt in October alone.
Increase in mortgage approvals
After the decline seen earlier this year, the Bank of England figures show mortgage approvals increasing.
The latest figures show 97,500 loans were approved for home purchases in October. This marks a significant increase on September’s record-breaking 92,100 approvals, which had also been the highest level since 2007.
Despite the effects of the pandemic, the housing market remains "robust”, according to Nationwide. As at November 2020, UK house prices are 6.5% higher than a year ago, with the average property valued at £229,721.
They have accounted these increases to a shift in people’s priorities in the late summer and autumn as some sought a change in lifestyle, or more space to work from home. In addition, the tax breaks regarding stamp duty have motivated buyers to take advantage of the scheme before it ends in March 2021.
Longer term outlook less optimistic
However, the longer term outlook for the property market remains uncertain. If the labour market continues to weaken, then the housing market activity is likely to slow - especially once the stamp duty holiday expires at the end of March 2021 and when we are likely to see a reversal of the trend of working from home.