Mortgage borrowing by individuals fell into negative territory in April, with net repayments of £0.8 billion, according to the latest Money and Credit figures released by the Bank of England.

The decline represents a sharp reversal from March, when net borrowing had surged to £9.6 billion, fuelled by a rush to complete purchases ahead of the end of a stamp duty relief window.

The number of mortgage approvals for house purchases dropped for the fourth consecutive month, falling by 3,100 to 60,500 in April. By contrast, remortgaging activity ticked up slightly, with approvals rising by 1,600 to reach 35,300, suggesting that existing borrowers remain active in the hunt for better rates.

“SOFTNESS”

Mark Harris, chief executive of mortgage broker SPF Private Clients, noted the continuing softness in the market. “With mortgage approvals falling slightly again in April, the market is bumping along,” he said. He pointed out that while the effective interest rate on new mortgages declined marginally to 4.49% in April, the average rate on existing mortgage stock rose to 3.86%, highlighting ongoing affordability pressures.

The figures offer fresh evidence of a hesitant housing market, where macroeconomic uncertainty and interest rate expectations continue to weigh on borrower sentiment. Richard Pinch, senior director of risk at Broadstone, said the steep fall in borrowing reflects the expiry of stamp duty incentives that had distorted the March figures.

“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,” said Pinch. He added that continuing weakness in mortgage approvals indicates that many potential buyers are adopting a ‘wait and see’ stance as they assess the future path of rates and economic conditions.

Broader trends in household borrowing also point to a cautious but persistent appetite for credit. Net borrowing on consumer credit rose to £1.6 billion in April, up from £1.1 billion the previous month. This included £0.8 billion in credit card lending and a further £0.8 billion from other forms of consumer credit.

COMMERCIAL BORROWING

Businesses also exhibited restraint. Private non-financial corporations repaid £2.4 billion in April, adding to net repayments of £0.7 billion in March. The flow of sterling money – M4ex – slowed to £6.2 billion in April from £12.7 billion in March. Within this, households and non-bank financial firms increased their holdings of money, while businesses reduced theirs by £3.3 billion.

Meanwhile, the flow of net sterling lending to private sector companies and households (M4Lex) fell markedly to £1.2 billion in April, down from £17.0 billion in March. Households accounted for a £0.7 billion reduction in borrowing, further dampening the overall figure.

Pinch warned that lenders must tread carefully to support borrowers in the current environment. “Until rates settle, mortgage lenders must be wary to ensure they are promoting positive outcomes and avoiding consumer detriment,” he said, adding that recent FCA data shows the proportion of homeowners with more than £300,000 in mortgage debt has almost doubled in recent years.