Mortgage borrowing by UK households rose sharply in March, according to the Bank of England’s latest Money and Credit statistical release, even as the number of new mortgage approvals continued to decline.

Net borrowing of mortgage debt increased to £13.0 billion in March, a significant rise from £3.3 billion in February – the highest monthly increase since records began in their current form, reversing the £1.0 billion contraction seen just a month earlier.

However, the rise in borrowing came despite a third consecutive monthly drop in mortgage approvals for house purchases, which fell by 800 to 64,300 in March. In contrast, approvals for remortgaging rose slightly, up by 1,000 to 33,400.

Consumer credit growth eased during the month. Net borrowing fell to £0.9 billion in March from £1.3 billion in February. Within this, borrowing on credit cards declined to £0.2 billion, the lowest level since April 2024. Other forms of consumer credit remained stable at £0.6 billion.

Households increased their deposits with banks and building societies by £7.4 billion, up from £5.0 billion in February, suggesting continued caution among savers despite strong borrowing figures.

ACTIVITY STILL ROBUST

Simon Gammon, managing partner, Knight Frank Finance, said: “Mortgage borrowing surged in March as homebuyers sought to beat changes to the stamp duty thresholds.

“Lloyds recorded its biggest-ever day of mortgage lending on March 27th as a flood of deals moved through the system, and we’ll likely see a lull in next month’s data as a result.

“Mortgage approvals for house purchase, which fell marginally, offer a better measure of the health of the housing market. Approvals have eased in recent months, but 64,300 still represents robust levels of activity and is broadly in-line with the 66,000 or so approvals that we were seeing in the lead up to the pandemic. Affluent markets driven by needs-based buyers are particularly busy.”

“Falling mortgage rates will fuel a rise in activity as the year progresses.”

And he added: “Falling mortgage rates will fuel a rise in activity as the year progresses, providing volatility in global trade policy deescalates and the UK’s economic outlook remains on track. Lenders are engaged in a price war, which has swiftly boosted sentiment among purchasers.

“Both HSBC and Barclays cut rates this week, following a large repricing by Santander last week. The larger lenders are also rethinking how they approach mortgage affordability testing, which will unlock the prospect of purchasing for many more people.”

STEADY AS SHE GOES

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “With mortgage approvals falling slightly again in March, it’s steady as she goes for the market.

“The effective interest rate paid on new mortgages fell to 4.5 per cent and since then, we have seen lenders continue to trim their mortgage rates. Further reductions from the Bank of England will help improve confidence and affordability, particularly now the stamp duty concession has ended.

“Remortgaging numbers rose by 1,000 in the month, following a decrease of 700 in February, suggesting that borrowers are shopping around for better deals even if it means the hassle of applying to another lender.”

CONTINUED MOMENTUM

Stephanie Daley, Director of Partnerships at mortgage advisor, Alexander Hall, said: “We’ve seen consistently strong activity across the mortgage market since the start of last year, with monthly mortgage approvals remaining above the 60,000 threshold since January 2024.

“This momentum has continued into 2025 despite a slight cooling of the market in the run up to the stamp duty deadline, with buyer confidence boosted by a number of base rate cuts since August of last year.

“With another cut expected next week, we only anticipate buyer market activity to strengthen as the year progresses.

“We’ve already seen many lenders act in anticipation of a May base rate reduction, with some offering fixed rate deals with sub-four percent interest rates.

“However, this means that should the base rate fall next week, there’s no guarantee that mortgage rates will follow suit, as these lenders have already factored this into existing offers.”

GREATER CONFIDENCE

Jonathan Samuels, chief executive of Octane Capital, said: “Whilst mortgage approval levels may have softened in recent months, this is almost certainly due to the recent stamp duty deadline and, despite a degree of hesitation on the side of buyers, the level of market activity seen so far throughout 2025 has remained robust.

“This demonstrates that buyers are acting with a far greater degree of confidence since interest rates stabilised and, indeed, started to fall.

“Today’s figures demonstrate more of the same with over 64,000 mortgages approved in March, suggesting that it’s already shaping up to be a positive year for the property market.

“With the prospect of further base rate reductions to come, the outlook for the year ahead is very positive indeed.”

STAMP DUTY IMPACT

And Tomer Aboody, director of specialist lender MT Finance, added: “With net borrowing increasing in March but approvals falling, this is further evidence of how the housing market reacts to stamp duty changes.

“With the end of the stamp duty holiday looming, many buyers pushed transactions through in March in order to save themselves money.

“With fewer approvals for house purchases for several consecutive months, we are seeing the effects of constantly hitting would-be buyers can have.”