Net mortgage borrowing mortgage decreased to £4.1bn in April from £6.4 billion in March, according to the latest figures from the Bank of England.
This is slightly below the pre-pandemic average of £4.3bn in the 12 months up to February 2020.
Gross lending rose slightly to £26.5bn in April from £26.2bn in March, while gross repayments increased to £21.5bn in April from £20.0 bn in March.
Approvals for house purchases, an indicator of future borrowing, decreased to 66,000 in April, from 69,500 in March.
This is slightly below the 12-month pre-pandemic average up to February 2020 of 66,700.
Approvals for remortgaging (which only capture remortgaging with a different lender) decreased to 47,800 in April.
This remains below the 12-month pre-pandemic average up to February 2020 of 49,500.
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Mark Harris, chief executive of mortgage broker SPF Private Clients:
“There are still signs of strong activity in the market even though some of the heat has come out of it, and mortgage brokers remain exceptionally busy as borrowers worry about rising rates.
“It doesn’t help that lenders continue to pull products at short notice. Mortgage pricing by smaller lenders and building societies is not as volatile as the bigger lenders as the ‘big six’ try to avoid being top of the ‘best buy’ tables due to the volume of business this attracts.
“Borrowers continue to favour longer-term fixes in order to protect themselves as much as possible, particularly as five-year products are so favourably priced compared with their two-year equivalents.”
Kevin Webb, managing director of Legal & General Surveying Services:
“The midpoint of 2022 is fast approaching, and the outlook is clear: while the mortgage market resisted economic pressure to keep a strong footing in the first quarter, today’s data signals a gradual decline in overall activity.
“Although the market is robust, it’s vital that prospective homeowners are aware of the full array of professional independent surveying services available so every buyer can make the most sensible financial choices possible.
“With inflation set to climb even further and offer conditions becoming increasingly complicated, prospective homeowners can rest assured that home surveys will provide the right analysis to inform their purchasing decision.
“Buying a home may be the single biggest transaction a person makes in their life, and so customers are right to expect high levels of reassurance. In this economic flashpoint, surveyors have a chance to share their extensive knowledge, adding value to the customer experience during a challenging time.”
Dave Harris, CEO of more2life:
“The mortgage market enjoyed a buoyant first quarter, deflecting pressure from wider economic turbulence to hold firm and even exceed levels seen pre-pandemic. However, today’s data points towards a slight dip in market activity.
“The energy price cap rise in April, alongside increases to national insurance and council tax contributions, will certainly have dealt a further blow to people’s savings and pension pots. Historically the Bank of Mum and Dad has always been a safety net for younger generations so, in the current economic environment, it’s important that older homeowners are aware of the full range of financial tools available to them and their families.
“Following the period of growth, the mortgage market has experienced over the last year or two, older homeowners are well positioned to explore later life lending options, with many sitting on record house price assets.
“As today’s data highlights, there may be a change in fortunes ahead but property is likely to remain a strong asset which has the potential to underpin increasing numbers of over-55s finances.”
Jeremy Leaf, north London estate agent and former RICS residential chairman:
“Mortgage approvals are always a good lead indicator of housing market direction. This latest reduction confirms what we have been seeing at the sharp end over the past few months – successive monthly increases in the cost of living as well as interest rates are compromising confidence to take on additional debt and having an inevitable knock-on effect on price growth.
“The continuing shortage of houses in particular means that we’re unlikely to see significant changes in prices but certainly there is less competition, which is also resulting in more time being taken to exchange contracts.”
Kay Westgarth, head of sales at Standard Life Home Finance:
“While the mortgage market remains resilient, today’s figures suggest that overall growth is slowing after 2021’s post-pandemic stamp duty holiday fuelled increases. That said, with there continuing to be an under-supply of housing in the UK, while the market may slow, we are unlikely to see significant downward movement in prices.
“As the energy price cap is once again set to rise in October 2022, we might expect a gradual uptick in older borrowers exploring the later life finance market as an option to augment their income.
“Benefiting from the historical buoyancy of the market, older homeowners are in a strong position to consider using some of the equity tied up in their property to finance the comfortable retirement they deserve.
“When increases in living costs and spiralling inflation are already pinching savings and pension pots, the value of expert advice is clearer than ever. All advisers need to be speaking to their clients about their options to ensure that they take a holistic view of their assets.”
Andrew Montlake, managing director of Coreco:
“This latest rise in consumer credit will trigger even more alarm bells at the Bank of England. It shows the economic storm clouds are getting darker by the day. People can take out credit and loans if they are confident, but in this case it’s almost certainly because they are seeking extra cash to cover their bills and put food on their tables.
“The drop-off in mortgage approvals is surprising as April and May have been exceptionally busy, although we do expect the combination of weaker borrower sentiment and lenders tightening their affordability to feed through in the months ahead. Remortgages, contrary to what this data suggests, are going through the roof as people seek to lock into the lowest rates available before they rise further.
“Perhaps the fact this data only shows remortgages to other lenders suggests people are increasingly being forced to remortgage with existing lenders due to affordability issues. All eyes are now on the jobs market and thankfully, for now at least, that remains fairly resilient”
Steve Seal, CEO of Bluestone Mortgages:
“Despite a dip in mortgage lending due to the current inflationary environment, it’s clear that the homeownership dream lives on. However, as the cost of living crisis continues to put a squeeze on household and personal finances, we expect to see a growing cohort of customers locked out of the mainstream mortgage market.
“For these individuals, it’s important to know that hope is not lost. Specialist lenders can cater to their needs and have a range of solutions to help those who are looking to climb onto or up the property ladder, no matter what their financial situation.
“Ultimately, all lenders have the responsibility to make sure customers are pointed in the right direction so that everyone has the equal opportunity to secure their homeownership dreams.”
Ross Boyd, founder of mortgage comparison platform Dashly.com
“April’s rise in consumer credit shows the unprecedented pressure many households are under. All the signs suggest people are turning to plastic and loans simply to keep their finances ticking over. The fall in mortgage approvals likely reflects deteriorating buyer sentiment and tightening affordability checks.
“Buying a new home right now or upsizing is something a lot of people have marked as low priority. The drop-off in remortgaging doesn’t tally with the significant remortgage activity that is taking place and will leave a lot of brokers scratching their heads. The major challenges facing the market right now are a scandalous lack of stock, interest rate rises and what has rapidly become a brutal cost of living crisis.
“Affordability, or the lack of it, is set to be the defining narrative of 2022. The mortgage and property markets are now almost certainly past their peak and the health of the jobs market will be crucial in determining what happens next.”
Richard Pike, sales and marketing director at Phoebus Software:
“Looking at the figures from the Bank of England today it appears that the mortgage market is entering a period of flux. Inflation is already weighing heavy and, for many people, ensuring that bills are paid is of the greatest importance. This of course does mean that some people, that may have been thinking of moving, have put the brakes on for now.
“The fact that borrowing on credit cards is at its highest level since February 2020 perhaps shows that some people may already be turning to alternative credit. Although there is always the opportunity to remortgage, those on shorter-term fixed rates, with deals coming to an end, are more than likely going to find that any new deal will be at a higher rate than they have been used to. So the questions are, when should you fix and for how long?
Rob Peters, director of Simple Fast Mortgage
“It’s never a good idea to cover the cost of living with debt such as credit cards or loans, as this creates a downward spiral of debt reliance which can only create further problems. It’s important that people who are struggling financially seek out the right support by speaking with any creditors and asking for ‘breathing space’ as well as taking advice from Citizens Advice or StepChange.
“That said, we’ve seen some borrowers with good credit ratings and strong affordability being turned down for additional borrowing by their existing mortgage lender. These borrowers have been forced to look at higher cost personal finance options such as unsecured loans in order to raise money needed. This indicates a lack of appetite by some mortgage lenders to allow borrowers to raise additional monies, at high loan to value ratios.”
Fanny Snaith, certified money coach:
“For people already with credit card debt, I see them increasingly looking to find a 0% balance transfer card to take the sting out of the APR. I am also seeing a lot more people searching for 0% on purchase cards.
“People are wanting to lock in cheap credit whilst they can. People’s financial wriggle room is getting tighter with their wages being stretched too far by soaring inflation. Even though credit is never a good idea to use for utilities and daily living, in the current climate a lot of people will feel they have no choice.”
Tomer Aboody, director of property lender MT Finance:
“Given that house prices have continued to rise, it is no surprise that there are lower mortgage approvals for new purchases. Less supply and more demand will always lead to higher pricing.
“With both new mortgages and remortgages at lower levels than they were pre-pandemic, a shift is being seen in activity towards a more ‘normal’ time, before stamp duty holidays. As higher mortgage rates are on the cards, buyers are taking advantage of the last remaining lower rates before the inevitable spike, with those remortgaging desperate to lock into a fixed-term mortgage for as long as possible
“Consumer credit borrowing is rising, a complete reversal of the previous trend towards saving. Higher inflation and living costs mean many will have to dip into savings in order to manage, with those who don’t have that buffer finding life increasingly difficult.’
Graham Cox, founder of SelfEmployedMortgageHub.com:
“The mortgage market is extremely busy, as is to be expected at this time of year. For those who can afford to, there’s no shortage of eagerness to buy now, rather than hold off. Many are actually bringing purchases forward, in the expectation that mortgages are only going to get more expensive and house prices will, at worst, stay roughly where they are now.
“And they may well be right. After all, this government always steps in to prop up prices when required with stamp duty holidays and help to buy schemes. The acid test will be what will happen if inflation remains high.
“The US Fed is expected to raise interest rates to 4% or 5% over the next year or so. What happens to house prices if the Bank of England has to follow suit? The property market could collapse like a Jenga tower”
Leon Diamond, CEO at LiveMore:
“Mortgage borrowing fell in April which was expected as the March figure was high, although it has been readjusted from £7bn to £6.4bn, which is quite a big change.
“The mortgage approval figures are also lower month on month so we are starting to see a slowdown in what has been a busy housing market over the past couple of years.
“Nevertheless, there is still demand for housing and borrowers will want to secure their new home and mortgage before rates go up even higher, which is widely anticipated.
“Long-term fixed rate mortgages are the sensible way for people to go in this rising rate environment and many people are now considering fixing for 10 years. But there are also 20-year fixed rate and fixed for life options, which can give peace of mind knowing that your monthly repayment will never go up.”
Joshua Gerstler, chartered financial planner at The Orchard Practice:
“We have been helping people with more second charge mortgages than in the past. This has mainly been for those wanting to borrow for home improvements. Since interest rates have been going up, it has been cheaper for them to borrow the additional money on a second charge and keep their main mortgage on the historic lower rates that they have. The intention would then be to refinance it all onto one mortgage when the fixed rate on their main mortgage ends.”
Paul McGerrigan, CEO at online broker Loan.co.uk:
“After the surge in mortgage borrowing in March, up to £6.4bn from £4.6bn in February, borrowing returned to more ‘normal’ levels of £4.1bn in April and approvals for house purchases also decreased by 3,500 to 66,000. This is slightly below the 12-month pre-pandemic averages to February 2020, a strong indicator that the property market is settling after its busiest time in decades.
“Consumer borrowing, however, is still seeing a strong increase, Aprils saw £0.7bn in new lending on credit cards, slightly down on March figures which showed almost £1bn in new lending, however, overall borrowing has continued to rise, at £1.4bn increase – up from March’s new consumer borrowing of £1.3bn increase.
“Brokers need to be on the front foot more than ever before and be proactive to help their clients in these disruptive times. There are always solutions which can help and it’s important to provide regular, up to date, expert advice to continually reach best outcomes for clients.”
