Individuals repaid £1.4bn of mortgage debt in July, following record borrowing in June of £17.7bn, according to data from the Bank of England.

Mortgage approvals for house purchases were 75,200 in July, down from 80,300 in June.

Consumers did not borrow additional consumer credit, on net. The effective rate on new personal loans remained low at 5.85%, but was the highest since March 2020.

Households’ net flow into deposit accounts decreased in July to £7.1bn, and deposit interest rates continued to fall slightly, reaching historically low levels.

Large businesses borrowed £4.5bn from banks in July, whilst small and medium sized businesses repaid £1.2bn.

Private non-financial companies raised no additional net finance from capital markets in July, compared to a monthly average net issuance of £3bn since March 2020.

Tomer Aboody, director of MT Finance, said: “Borrowers repaid £1.4bn of mortgage debt on net in July, following June’s record month of borrowing where borrowers attempted to take advantage of the maximum stamp duty holiday saving.

“Gross lending fell to its lowest level since June 2020, while approvals for house purchases decreased to 75,200.

“This slowing down and recalibrating of the market is to be expected, particularly with the onset of the summer holidays and many people keen to get away for a much-needed break.

“Confidence remains strong, however, particularly as borrowing rates remain low.

With the effective rate on new mortgages decreasing by 12 basis points to 1.83% in July, borrowers are finding that the dream home they may not have been able to afford before is now within reach.

“The continued lack of stock is the issue for many as we head into autumn, as without some sort of extended stamp duty holiday for downsizers there is little incentive for older homeowners to move to a smaller property and free up family homes.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “These figures are always a good indicator of future direction of travel for the housing market.

“Interestingly they show ‘activity’ on the turn as the beginning of tapering of the stamp duty concession put the brakes on but show that there is still plenty of life remaining as buyers and sellers aren’t finished yet.

“Approvals are running above those prevailing before the beginning of the pandemic, which we are seeing at the sharp end.”