UK households turn to credit as mortgage approvals ease and savings rise
Pedro Goncalves·
Finance Reporter, Yahoo Finance UK
Mon 5 January 2026 at 9:27 am GMT-5
3 min read
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Mortgage approvals edged lower in November as consumer borrowing rose by the most in two years, a sign that people put the cost of Christmas on their credit cards.
The number of mortgages approved for house purchases fell to 64,500, down around 500 from October, according to figures from the Bank of England’s Money and Credit report for November. By contrast, approvals for remortgaging with a different lender rose by 3,200 to 36,600.
Jason Tebb, president of OnTheMarket, said: “Approvals decreased only slightly in November, underlining the overall resilience and determination from buyers and sellers alike to proceed with their moves.”
Simon Gammon, managing partner at Knight Frank Finance, added: “Given all the noise in the run-up to the budget, it looks like many buyers put plans on hold until after Christmas. That said, mortgage rates continued to ease through December, and anecdotal evidence from our brokers suggests that some pent-up demand should be released as we move towards spring. The lenders begin the year with fresh targets and we expect the larger lenders to be the most aggressive in cutting rates in the first weeks of January.”
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Nathan Emerson, chief executive of property professionals’ body Propertymark, said: “Throughout 2025, it has been encouraging to see lenders offering increasingly competitive mortgage products, particularly any aimed at first-time buyers, helping to support activity despite wider economic uncertainty. The base rate cut introduced before Christmas is likely to further boost confidence as we head into 2026, making borrowing more affordable and encouraging more buyers to take the next step.”
Meanwhile, credit card borrowing rose at its fastest annual rate in nearly two years. The Bank of England reported that annual growth in consumer credit increased to 8.1% in November from 7.5% in October. Credit card borrowing climbed 12.1%, up from 10.9%, marking the highest figure since January 2024, when it was 12.5%.
Simon Trevethick, head of communications at StepChange Debt Charity, said: “For many households, the increase in consumer credit borrowing in November may reflect the reality that everyday costs are becoming harder to manage without turning to credit."
"The increase could also indicate people borrowing more in preparation for the festive period – our own polling found that 14 million people would struggle to afford Christmas. While some people will be able to repay any additional borrowing, others risk carrying balances into the new year and beyond. No one should feel they have to cope with problem debt on their own. Free, impartial debt advice is available.”
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Karim Haji, global and UK head of financial services at KPMG, said the data shows that consumers are being squeezed.
He explained: “The uptick in consumer borrowing will catch few by surprise as many households rely more heavily on credit to manage the elevated costs of Christmas. The clear theme as we enter 2026 is one of fragility, [with] continued economic uncertainty and cautious consumer spending. The regulator is putting a heavy emphasis on supporting customers. Lenders need to be very clear in their approach to customer-focused rules like consumer duty, fair value and targeted support.”
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The report also said that households were increasing their savings. In November, they deposited £8.1bn with banks and building societies, up from £6.7bn in October. Of this, £5.1bn went into ISAs.
Following speculation over the cash ISA limit, the government confirmed in the autumn budget that the annual adult cash ISA subscription limit will be reduced to £12,000 from April 2027, while the overall ISA limit will remain at £20,000, leaving the potential for some savers to allocate more to stocks and shares. Over-65s retain the full £20,000 cash ISA allowance.
UK non-financial businesses also increased borrowing, taking £6.3bn of net loans from banks and building societies, including overdrafts, after net repayments of £1.2bn in October.
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