Latest data from the Bank of England has found that net borrowing of mortgage debt by individuals decreased sharply by £13.7 billion to -£0.8 billion in April. This followed an increase in net borrowing by £9.6 billion in March.

Net mortgage approvals for house purchases decreased for the fourth consecutive month, with a fall of 3,100 to 60,500 in April. By contrast, approvals for remortgaging increased by 1,600, to 35,300 in April.

Richard Pinch, Senior Director of Risk at Broadstone said “The effects of the Stamp Duty deadline are clear to see in today’s figures with mortgage borrowing surging by over £9 billion in March before collapsing by £13.7 billion in April as buyers rushed to complete on purchases.

“Mortgage approvals continued to decrease highlighting that many would-be buyers continue to ‘wait and see’ how the current macroeconomic uncertainty will impact the market and rates. While this may lead to caution in the short-term, it could drive further pent-up demand towards the end of the year.

“Until rates settle, mortgage lenders must be wary to ensure they are promoting positive outcomes and avoiding consumer detriment. Our analysis of the latest FCA data shows that the proportion of homeowners with over £300,000 of mortgage debt has nearly doubled from 5% in 2017 to 9% in 2024 so lenders must continue to proactively provide support and assistance where necessary.”

Aaron Milburn, UK Managing Director at Pepper Advantage, said “UK mortgage approvals have declined for the third consecutive month, casting a shadow over the outlook for early 2025 and prompting renewed calls for the Financial Conduct Authority (FCA) to reassess current lending regulations. According to the latest data from the Bank of England, approvals fell from 64,300 in March to 60,500 in April, representing a decrease of approximately 6%.

“While the recent interest rate cut may provide some relief for existing borrowers, the data highlights the market’s ongoing struggle with economic uncertainty. Persistently high inflation and broader macroeconomic pressures continue to dampen expectations for further rate reductions, leaving the mortgage market in a prolonged state of flux.”

Source: Credit Connect