Net borrowing of mortgage debt by individuals dropped by £13.7bn to -£0.8bn in April, after a rise of £9.6bn in March, according to the Bank of England (BoE) Money and Credit report.
Net mortgage approvals for house purchases fell by 3,100 to 60,500 in April, marking the third month of decline.
Remortgaging approvals went up by 1,600 to 35,300.
Net borrowing of consumer credit by individuals reached £1.6bn in April, up from £1.1bn in March.
Meanwhile, net credit card borrowing doubled to £0.8bn, while other forms of consumer credit were steady at £0.8bn, up slightly from £0.7bn.
Private non-financial corporations repaid £2.4bn of finance in April, compared to £0.7bn in March.
The net flow of sterling money (M4ex) was £6.2bn, down from £12.7bn in March.
Non-intermediate other financial corporations and households increased their holdings by £6.5bn and £3.0bn respectively, while private non-financial corporations reduced theirs by £3.3 billion.
Sterling net lending to private sector companies and households (M4Lex) was £1.2bn in April, compared to £17.0bn in March.
Within this, private non-financial corporations and non-intermediate other financial corporations accounted for £1.8bn and £0.1bn.
Net lending to households fell by £0.7bn.
Reaction:
Nathan Emerson, CEO of Propertymark:
“As the global economy continues find a new balance, many people are acutely aware there could be challenges ahead regarding overall affordability when approaching the buying and selling process.
“We are starting to see more competitive mortgage deals from key lenders, but the eligibility criteria in some cases remains extremely rigid and limited.
“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.
“When the conditions are right, it would be encouraging to see further base rate cuts to help spur on a ‘bidding war’ among the lenders attract those who are aspiring to take their next step onto the housing ladder and are holding out for more competitive mortgage deals.”
Tomer Aboody, director of specialist lender MT Finance:
“With net borrowing dropping sharply in April once the Stamp Duty holiday had ended, this is further evidence of how the housing market reacts to stamp duty changes.
“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.”
Mark Harris, chief executive of SPF Private Clients:
“With mortgage approvals falling slightly again in April, the market is bumping along.
“The effective interest rate paid on new mortgages fell slightly to 4.49 per cent in April and since then, we have seen lenders trim their mortgage rates further.
“However, with the rate on the outstanding stock of mortgages rising slightly to 3.86 per cent, affordability remains a concern.
“Remortgaging numbers rose by 1,600 in the month, following a rise of 1,000 in March, suggesting that borrowers are keen to shop around for better deals even if it means the hassle of applying to another lender.”
Jason Tebb, president of OnTheMarket:
“While approvals for house purchases, an indicator of future borrowing, dipped again in April for the fourth consecutive month, market stability and buyer confidence continues to be steady.
With the rate on newly-drawn mortgages falling again in April, while the rate on outstanding mortgage stock rose slightly, overall there are signs that affordability is easing a little. Four rate reductions since August have helped, along with lenders easing criteria, but mortgage rates are still higher than many have grown used to in recent years.
Further rate reductions from the Bank of England would provide more impetus for the market, particularly now that the stamp duty concession has ended.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“Always a good indicator of future market activity, these mortgage approval numbers may have dropped for the past four months but don’t tell the whole story.
“Firstly, the change has proved to be relatively modest and buyers may be pausing but are still proceeding with their moves, as they take advantage of lower repayments and greater availability of higher loan-to-value mortgages.
“Secondly, we do not expect too much change going forward, particularly as most seem to accept now that base rate is unlikely to fall as far and as fast as anticipated.”
