Net mortgage borrowing rose in March as house purchase approvals edged higher and remortgage approvals increased sharply, according to the latest Bank of England Money and Credit figures.

Net borrowing of mortgage debt by individuals increased to £6.2 billion in March, up from £5.2 billion in February and above the previous six-month average of £4.9 billion.

Net mortgage approvals for house purchases rose to 63,500 in March from 62,700 in February. The figure was also above the average of around 63,200 recorded over the previous six months.

The larger movement came in remortgaging, where approvals increased to 51,300 in March, up from 41,200 in February.

The figures suggest continued activity in the mortgage market, with borrowers looking to secure finance against a backdrop of rate uncertainty and wider pressure on household finances.

CONSUMER CREDIT EASES SLIGHTLY

Net borrowing of consumer credit by individuals slipped slightly to £1.9 billion in March from £2.0 billion in February, although it remained just above the previous six-month average of £1.8 billion.

Within this, net borrowing through credit cards was unchanged at £0.7 billion. Borrowing through other forms of consumer credit, including car dealership finance and personal loans, fell to £1.2 billion from £1.3 billion.

BUSINESS BORROWING INCREASES

Private non-financial corporations borrowed £3.6 billion of finance on a net basis in March, following net borrowing of £2.9 billion in February.

Within total net finance raised, bank loans accounted for £9.9 billion of net borrowing in March, compared with £4.3 billion in February.

INDUSTRY REACTION

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Mortgage approvals picked up in March, 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 as rates started to rise as a result of the Middle East conflict.

“The effective interest rate paid on new mortgages decreased to 4.03% and the rate on the outstanding stock of mortgages also fell to 3.93%. Affordability concerns remain but in recent days we have seen lenders trim their mortgage rates, which will be welcomed by borrowers.

“Remortgaging numbers jumped significantly, suggesting that borrowers coming off low rates are shopping around for the best deal possible rather than opting for the ease of sticking with their existing lender.”

HOLDING UP

Simon Gammon, managing partner, Knight Frank Finance, said: “These figures chime with other indicators, including the Nationwide House Price Index, suggesting the UK housing market is holding up remarkably well despite elevated economic uncertainty and the surge in mortgage rates during March.

“Rates have since eased from their post-conflict highs, with leading fixed deals now a little above 4.5%, which should support continued resilience through the remainder of spring. However, there are clear risks to the outlook beyond that.”

He added: “Sustained higher oil prices could force lenders to reprice upwards once again. Margins remain extremely thin, limiting lenders’ ability to absorb volatility.

“At the same time, strong borrower demand is placing operational pressure on lenders, prompting repricing to maintain service levels. This dynamic risks creating a feedback loop that amplifies rate movements.

“While current rate levels are still low enough to support demand, any further increases would inevitably begin to weigh on activity later this year.”

CHOPPING AND CHANGING

Gareth Lewis, deputy CEO of specialist lender MT Finance, said: “It’s not surprising to see net mortgage approvals picking up in March as there was a rally as buyers and sellers tried to push through deals before mortgage rates rose.

“There was a lot of chopping and changing with lenders pulling rates at short notice as Swap rates ballooned, and borrowers rushed to secure deals.

“Transaction levels remain depleted, and with interest rates on hold for now, impetus must come from elsewhere.

“The government should be doing more to support the housing market and encourage activity and confidence, which would have the knock-on effect of benefitting the wider economy.”

HEALTHY INCREASE

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said “What’s particularly interesting about these latest mortgage approvals is that not only are they a good indicator of likely housing market activity over the next few months, they reflect a healthy increase at a time when we might have expected more of a pause with so many other economic distractions.

“We have seen a similar pattern in our offices – a grim determination of the need-not-want-to-moves taking their time as there is plenty to look at but generally still happy to proceed after negotiating best possible terms.”

LONG-TERM IMPACT

Nathan Emerson, CEO of Propertymark, said: “While it is positive to witness continued momentum regarding lending, we must be mindful of potential longer-term impacts due to current global unrest. We have witnessed inflation nudge back upward to 3.3%, which may influence future base rate decisions across the summer months.

“Additional pressure on household finances often gets translated to consumer level as an ‘aftershock’, sometimes many months in delay.

“However, already there have been instant burdens for consumers to deal with, such as price increases on general household items, and we have additional hikes to consider, such as how Ofgem might react regarding the next energy price cap review, which is due to take place next month.

“Currently, it is a case of being extra vigilant on monthly spending, considering that some outgoings may climb upwards as the year plays out.”