Mortgage approvals for house purchases rose in April even as net mortgage borrowing fell sharply, according to the latest Money and Credit data from the Bank of England.
Net borrowing of mortgage debt by individuals declined to £4.4 billion in April, down from £6.8 billion in March and below the previous six-month average of £5.1 billion.
However, net mortgage approvals for house purchases increased to 65,900, up from 64,000 in March and above the average of around 63,100 recorded over the previous six months. Approvals for remortgaging were broadly unchanged.
The figures suggest that buyer demand remains relatively resilient despite affordability pressures and uncertainty around the future path of interest rates.
UNDERLYING RESILIENCE
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Mortgage approvals picked up in April, demonstrating an underlying resilience to the housing market which started to make itself apparent once the Budget was in the rear-view mirror and continued even as rates started to rise as a result of the Middle East conflict.
“The effective interest rate paid on new mortgages increased to 4.08% while the rate on the outstanding stock of mortgages fell to 3.92%.
Affordability concerns remain but more than a dozen lenders cut their mortgage rates last week, which will assist borrowers, and it is hoped that the Bank of England will continue to hold base rate steady at least for now.
“Remortgaging numbers were broadly unchanged, suggesting that borrowers may be opting for the ease of sticking with their existing lender when coming to the end of their current deal, rather than shopping around for a new one with a different lender.”
BORED OF WAITING
Tomer Aboody, director of specialist lender MT Finance, said: “Although we have seen slightly higher mortgage rates, surprisingly we have also seen an increase in mortgage approvals for buyers, which indicates that people still want or have to move and perhaps are getting bored of waiting around for optimal conditions.
“With no positivity coming from the government and the economic outlook looking tough, buyers are having to be resilient. The macro climate is hitting mortgage rates and inflation, but that cannot hide the poor leadership currently in evidence in the country, where there is no push for growth.”
Alongside the mortgage figures, the Bank of England reported that net borrowing of consumer credit remained largely unchanged at £1.9 billion, in line with the previous six-month average.
Credit card borrowing increased slightly to £0.8 billion from £0.7 billion in March, while borrowing through other forms of consumer credit, including personal loans and car finance, fell to £1.0 billion from £1.2 billion.
TURBULENT PERIOD
Karen Noye, mortgage spokesperson at Quilter, said households added £12 billion to ISAs in April, supported by the end of the tax year and anticipation of proposed changes to Cash ISA allowances from April 2027.
She said: “The data also outlines what has been a turbulent period for the mortgage and housing market. Net mortgage borrowing fell to £4.4 billion in April, down sharply from £6.8 billion in March and below the six-month average of £5.1 billion.
“However, annual growth in net mortgage lending rose to 3.3% from 3.0%, and approvals, which are an indicator of future borrowing, rose to 65,900, up from 64,000. This likely reflects the slight easing of mortgage rates following the initial shock caused by the conflict in the Middle East.
“While the market has held up relatively well thus far, pressure on household finances is building. Higher energy costs and other inflationary pressures will weigh on people’s ability to save, and when combined with elevated mortgage rates, this is likely to dampen buyer appetite and slow activity in the months ahead.
“Mortgage rates will continue to be the key driver of activity, and while the sharp increases seen previously have eased slightly, there is not yet a clear trajectory downwards. In this environment, borrowers should review their options early and seek the support of a mortgage adviser to ensure they secure the best possible rates.”
ONGOING AFFORDABILITY PRESSURES
Emily Hollands, group head of intermediary sales and distribution at Precise Mortgages, said the figures point to a market that is adapting to higher borrowing costs.
She said: “The latest Money and Credit data points to a housing market showing continued resilience despite ongoing affordability pressures.
“Net mortgage approvals for house purchases increased in April, even as net borrowing by individuals eased to £4.4 billion, suggesting buyers are becoming increasingly comfortable making decisions in an environment where interest rates and mortgage pricing are growing more familiar rather than more uncertain.
“What is particularly encouraging is that activity is holding up despite continued cost pressures, suggesting there remains significant underlying demand among buyers who have spent the last two years adapting to a higher rate environment.
“However, stronger activity should not be mistaken for a return to previous market conditions. Today’s borrowers remain highly payment-conscious and focused on affordability, meaning lenders, brokers and borrowers alike are continuing to prioritise stability and certainty when making decisions.”
While borrowing activity softened during the month, the increase in mortgage approvals indicates that demand in the housing market remains intact, with prospective buyers continuing to progress purchases despite affordability challenges and a higher interest rate environment.
