Bank of England registers slowing of borrowing following record month

Mortgage borrowing fell back in April to £3.3bn as the market cooled somewhat following the record £11.5bn borrowed in March.

The £3.3bn borrowed was also lower than the £5.7bn monthly average borrowed in the six months to February 2021. Approvals for house purchase stood at 86,900, up from 83,400 in March

Despite weaker net lending, both gross lending and repayments remain above the levels seen since the start of 2020 and the variability is likely to reflect the reduction in the stamp duty, which was initially expected to end in March, but has now been extended to the end of June.

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Dave Harris, CEO of more2life, said: “April was another busy month for the mortgage market, largely due to the extension of the stamp duty holiday. Following the record highs seen in March, mortgage approvals and net mortgage borrowing remained strong, as products like low deposit mortgages started to return to the market.

“The partial reopening of non-essential retail and the continued success of the vaccine rollout during this period will also have played a key role in boosting buyer appetite.

“The equity release market has also fared well in recent months, with consumer confidence improving year-on-year and product choice reaching an all-time high. The Stamp Duty holiday has also encouraged more borrowers to use equity release to fund a house purchase, and this is likely to remain the case while the tax break continues.

“It’s therefore vital that advisers are knowledgeable on how to meet growing demand from older homeowners, as well as the full range of solutions now available to this cohort.”

Marc von Grundherr, director of Benham and Reeves, added: “We’ve seen the market move at an incredible rate in recent months, fuelled by the enthusiasm of buyers keen to secure a stamp duty holiday saving.

“With the extension of the holiday in March, the market rebounded from the previous negative trends seen approaching the initial deadline.

“While the appeal of this initiative has started to fade for those looking to transact now, the further stimulus of a government-backed 95% mortgage is sure to keep the coals of the UK property market burning bright and avoid any downturn as we come towards the extended deadlines.

“At the same time, we’ve seen many lenders reducing rates at pace and should this mortgage war continue, a further market boost is likely despite the end of the stamp duty holiday, in the short term at least.”