Bank of England data shows sharp fall in borrowing and approvals in April
Mortgage lending in the UK fell sharply in April, according to the latest Money and Credit report from the Bank of England.
Net mortgage borrowing declined by £13.7 billion, swinging from a positive £13 billion in March to -£0.8 billion in April. This marks the steepest monthly fall since June 2021. The annual growth rate in net mortgage lending also eased, slipping from 2.7% to 2.5%.
Gross mortgage lending also dropped to £16.9 billion in April from £39.9 billion the previous month, while repayments fell to £18.4 billion from £23.7 billion.
Approvals for house purchase loans — often seen as a forward-looking indicator — declined for the fourth month in a row, down by 3,100 to 60,500. In contrast, remortgage approvals with new lenders rose by 1,600 to 35,300, building on a 1,000 increase in March.
The effective interest rate on newly arranged mortgages edged down slightly to 4.49% in April. Meanwhile, the rate on existing loans crept up to 3.86% from 3.84%.
“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,” said Aaron Milburn (pictured left), UK managing director at Pepper Advantage. “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.”
Nathan Emerson (pictured centre), chief executive of Propertymark, noted that affordability concerns remain front of mind for many prospective buyers. “As the global economy continues to find a new balance, many people are acutely aware there could be challenges ahead regarding overall affordability when approaching the buying and selling process,” he said. “Many people may have also been temporarily deterred from potentially moving house following Stamp Duty threshold hikes across England and Northern Ireland from the start of April.”
For Zoopla executive director Richard Donnell (pictured right), the fall in borrowing was partly due to seasonal factors. “A slowdown in demand for mortgages in April reflects the impact of a late Easter,” he said.
“We expect mortgage data for May to increase in line with a pickup in new sales being agreed, which are running at their highest level for four years. A key factor is also lenders relaxing affordability tests, which is delivering the average home buyer up to 20% more borrowing capacity compared to a few months ago. We expect a busy June as buyers look to secure sales before the summer holidays kick in.”
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