Net borrowing of mortgage debt by individuals saw a significant rise in March, jumping by £9.7bn to reach £13.0bn, according to the Bank of England’s latest Money and Credit report.
This marks a sharp reversal from February, when net borrowing fell by £1.0bn to £3.3bn.
Despite the increase in borrowing, the number of net mortgage approvals for house purchases declined for the third month in a row, falling by 800 to 64,300 in March.
In contrast, remortgaging activity rose, with approvals increasing by 1,000 to 33,400.
Consumer credit growth slowed notably during the same period.
Net borrowing of consumer credit by individuals stood at £0.9bn in March, a drop from £1.3bn in February.
The decline was led by reduced credit card borrowing, which fell to £0.2bn – the lowest level since April 2024.
Other forms of consumer credit remained flat at £0.6bn.
In terms of savings, households increased their deposits with banks and building societies by £7.4bn in March, an uptick from £5.0bn in February, suggesting continued caution in consumer spending amid economic uncertainty.
Meanwhile, private non-financial corporations (PNFCs) continued to reduce their debt levels, with net repayments of £1.5bn in March following repayments of £1.0bn the previous month.
The broader money supply also saw a substantial increase.
The net flow of sterling money (M4ex) was £11.6bn in March, compared to £1.7bn in February.
Households and PNFCs contributed most to this growth, increasing their holdings by £7.4bn and £5.4bn, respectively.
This was partially offset by a £1.1bn reduction in holdings by non-intermediate other financial corporations (NIOFCs).
Additionally, the flow of sterling net lending to private sector companies and households (M4Lex) rose sharply to £17.3bn in March, more than tripling February’s figure of £5.4bn.
Of this, households accounted for £13.0bn, while NIOFCs added a further £3.4bn, underscoring a renewed appetite for borrowing across sectors.
Reaction:
Nathan Emerson, CEO of Propertymark:
“As the global economy continues to react to different events, 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 certain key lenders, but the eligibility criteria in some cases remains tight.
“It remains vital inflation stays on a pathway that keeps it as close to the Bank of England’s initial target of 2% as possible.
“Although there are hints that we may witness various base rate cuts as the year progresses from international bodies, it remains prevalent to consider such cuts will only happen when conditions permit.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“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% 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.”
Tomer Aboody, director of specialist lender MT Finance:
“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.”
Jason Tebb, president of OnTheMarket:
“With approvals for house purchases, an indicator of future borrowing, dipping slightly in March for the third consecutive month, market stability and buyer confidence continues to be steady.
“As the rate on newly-drawn mortgages fell in March, along with the rate on outstanding mortgage stock, there are signs that affordability, while remaining a concern for borrowers, is starting to ease.
“Two rate reductions in the second half of last year, followed by one so far this year is helping but mortgage rates are still higher than many have grown used to in recent years.
“Further reductions from the Bank of England, perhaps even next week, would provide a welcome shot in the arm for the market, particularly now that the Stamp Duty concession has ended.”
