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The size of the mortgage mountain might just keep shrinking

Borrowers owed their banks and building societies £1.66 trillion during the period, down by around £20 billion on the £1.68trillion in the first quarter (PA) (PA Archive)
Borrowers owed their banks and building societies £1.66 trillion during the period, down by around £20 billion on the £1.68trillion in the first quarter (PA) (PA Archive)

In the great line-up of British financial statistics there are some numbers, such as the national debt, that can be guaranteed to go one way — upwards — pretty much every month.

The total value of outstanding residential mortgages is another of those. So what do we make of today’s eye-catching reveal from the Bank of England?

Not only did the total drop in the second quarter, but it fell by more than it ever has done before, or more accurately, since record began in 2007.

Borrowers owed their banks and building societies £1.66 trillion during the period, down by around £20 billion on the £1.68trillion in the first quarter.

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We know that demand for housing has been pretty moribund over the summer, with higher interest rates largely to blame

Sure enough, second quarter gross advances of £52.4 billion were down by almost a third on a year previously.

Meanwhile at the other end of the mortgage journey borrowers are focusing on repaying their home loans as quickly as possibly in the hope of gaining membership of that happy, if slightly smug, club — the mortgage-free homeowner.

That may help explain why there has been something of a mortgage price war over recent months.

With fewer new borrowers around and a scramble to pay off existing debt the pickings are getting thinner for the mortgage industry — lenders are having to hustle for business. It remains to be seen whether the second-quarter figure is blip or a trend.

But a further, and probably final, turn of the interest rate screw next week is hardly going to encourage a flood of new loans.