Net borrowing of mortgage debt by individuals decreased to £4.7bn in February, from £5.9bn in January, according to the latest Bank of England (BoE) figures.
Approvals for house purchases, an indicator of future borrowing, fell to 71,000 in February, from 73,800 in January, but remains above the 12-month pre-pandemic average up to February 2020 of 66,700.
Approvals for remortgaging (which only capture remortgaging with a different lender) rose to 48,200 in February. This remains below the 12-month pre-pandemic average up to February 2020 of 49,500, but is the highest since February 2020 (52,100).
Steve Seal, CEO, Bluestone Mortgages, said: “Although today’s dip in mortgage lending is hardly surprising given the current inflationary pressures, affordability will continue to be an issue.
“Our own research found that rising costs of everyday items are the main concern for ‘non-vanilla’ customers.
“Combined with rising energy prices, and the hike to National Insurance contributions, we’re likely to see a growing cohort of customers locked out of the mainstream mortgage market.
“For these individuals, it’s important to remember that there is help at hand. Specialist lenders have a number of solutions available to help those looking to take their first or next step onto the property ladder, whether they have complex credit, a blip in their credit history or are self-employed.
“Ultimately, high street lenders have a duty of responsibility to point these customers in the right direction so that they too can achieve their homeownership dreams.”
Joshua Elash, director of property lender MT Finance, added: ‘Mortgage approvals for house purchases remain strong as homeowners and investors alike focus on taking advantage of low interest rates while they can, in expectation of further rate rises in the months ahead.
‘We expect this trend to continue as more and more prospective buyers attempt to lock into a fixed-rate mortgage on a new property, while they get ahead of the impact inflation is going to have on increasing house prices. More than ever, this is the time to buy.’
Mark Harris, chief executive of mortgage broker SPF Private Clients, concluded: “The Bank of England records a dip in lending and approvals for house purchases in February, confirming that the froth has come out of the market.
“However, the numbers are still above the pre-pandemic average, demonstrating a calmer, more measured, and ultimately more sustainable market.
“There is certainly plenty to keep brokers busy as borrowers increasingly worry about rising mortgage rates and are keen to secure a fixed rate in particular before they rise further. With the effective interest rate on newly drawn mortgages rising by 1 basis point to 1.59% in February, the only way is up for rates although they are still at comparatively low levels from an historic perspective.”
