The Bank of England published its Money and Credit figures for July on 1 September, and two lines in it point in opposite directions.
Lenders approved 56,053 mortgages for house purchase, the lowest monthly total since January 2024 and well short of the roughly 59,500 that economists had expected. In the same month, net consumer credit, meaning unsecured borrowing on credit cards, overdrafts and personal loans, rose by £2.006bn, ahead of the £1.8bn forecast and the biggest monthly increase since November 2025.
Fewer people committing to a mortgage. More people borrowing without security. Those are not contradictory findings; they are two symptoms of the same thing, and it is worth understanding what that is before drawing the wrong conclusion from either.
What the figures do and do not say
| July 2026 | Figure | Against expectations |
|---|---|---|
| Mortgage approvals for house purchase | 56,053 | Below the roughly 59,500 forecast, lowest since January 2024 |
| Net consumer credit | Up £2.006bn | Above the £1.8bn forecast, largest monthly rise since November 2025 |
| Bank Rate | 3.75% | Unchanged since December 2025 |
| CPI inflation | 2.9% in July | Up from 2.6% in June |
Approvals are a forward-looking measure. They count mortgages agreed, not completions, so they show what buyers were deciding to do in July rather than what happened in the market months earlier. A fall in approvals means fewer people chose to commit that month.
Consumer credit is a net figure, meaning new borrowing minus repayments. A £2bn net rise does not mean households borrowed exactly £2bn; it means borrowing outpaced repayment by that much. On its own, rising unsecured credit is not automatically distress. It can reflect confidence, or spending brought forward, or simply more people putting large purchases on a card for the points. But a jump in unsecured borrowing in the same month that mortgage commitments hit a two-year low is a combination that deserves a closer look.
Why the two moved in opposite directions
Three explanations are doing most of the work, and they are not mutually exclusive.
Mortgage decisions are postponable, and everyday costs are not. Buying a house is one of the few large financial commitments a household can simply defer. Groceries, energy, insurance renewals and car repairs cannot be. When budgets tighten, the mortgage decision slides to next year while the shortfall in the current month goes on a credit card. That is the mechanically simplest reading of these two numbers, and probably the largest part of it.
Inflation ticked back up. CPI rose to 2.9% in July from 2.6% in June. That is a long way from the peaks of a few years ago, but it is moving the wrong way, and it lands on households who have already spent several years absorbing higher prices. Rising prices reduce the monthly surplus that makes a mortgage feel affordable, while increasing the gap that unsecured credit fills.
Affordability, not the headline rate, is the binding constraint. Bank Rate has sat at 3.75% since December, and lenders have been trimming fixed rates. Yet approvals fell anyway. That is a reminder of something we set out in detail when looking at why the advertised rate is not the rate you get offered: the rate on the poster is not what decides whether a purchase happens. Deposit size, the lender’s stress test and existing credit commitments decide it. And that last one matters here, because unsecured borrowing feeds directly into a mortgage affordability assessment.
The trap hiding in the combination
This is the part worth acting on, and it is easy to miss.
If you are planning to buy in the next year or two, the unsecured borrowing you take on now directly reduces what a lender will let you borrow later. Monthly commitments on credit cards, car finance and personal loans are deducted from the income a lender is willing to lend against. A £250 a month car finance payment can reduce your maximum mortgage by roughly £15,000 to £20,000, depending on the lender’s method.
So the household that defers the mortgage and fills the gap with credit can end up in a worse position next year than it was this year, even if its income has risen. The deferral was rational month to month, and the cumulative effect works against the original goal.
Two practical implications follow. First, if a purchase is genuinely still the plan, treat unsecured borrowing as borrowing against your future deposit and your future loan size, not just as this month’s convenience. Second, if you have existing balances, clearing or consolidating them before applying often does more for your borrowing power than adding the same amount to the deposit would.
There is a savings-side version of the same logic. Money earmarked for a deposit in the next two or three years usually belongs somewhere accessible and capital-secure, which is why the cash side of the ISA rules matters to buyers specifically, and why the proposed £12,000 cash ISA cap is worth understanding before April 2027 if you are saving hard toward a purchase.
What one month of data is worth
Not very much on its own, and it is worth saying so plainly. Monthly lending figures are volatile, get revised, and are distorted by seasonality and one-off effects. July also sits in the middle of the summer, which is never a representative month for property.
What makes this release worth reading is not the single month but the direction of two series at once. If August and September repeat the pattern, then a genuine shift in household behaviour is underway. If they do not, July was noise. The next Money and Credit release is the thing to watch rather than this one, and the Bank’s next rate decision after that.
Frequently asked questions
Does a fall in approvals mean house prices will drop? Not necessarily, and not quickly. Approvals measure demand for purchase mortgages, and prices respond to the balance of demand and supply, which includes cash buyers and how many sellers actually list. Weaker approvals reduce upward pressure rather than guaranteeing falls.
Is rising consumer credit a sign of trouble? It can be, but the figure alone does not tell you. The same £2bn could be people financing holidays confidently or people covering bills reluctantly. Arrears and default data, published separately and with a lag, are the better distress signal.
Should I delay buying because approvals are falling? The wrong question. Other people’s decisions do not change your affordability. Whether the numbers work for you, at the deposit and rate you can actually access, and whether you intend to stay long enough to absorb transaction costs, is what decides it.
Does clearing a credit card really improve my mortgage chances? Generally yes, and by more than most people expect, because lenders deduct the monthly commitment from the income they lend against. Reducing balances also helps your credit profile, though avoid closing long-held accounts immediately before applying.
The useful takeaway from July is not that the market is weak or that households are struggling, because one month cannot establish either. It is the reminder that these two decisions are connected. The credit you take on while waiting for the right moment to buy is quietly changing what will be possible when that moment arrives.