Figures show a 290% rise in mortgage borrowing, but approvals for new home purchases fell for the third month
A rush to get property purchases over the line before last month’s stamp duty rise pushed UK mortgage lending to a four-year high in March, official data shows.
Bank of England figures show that the then-imminent changes to stamp duty in England and Northern Ireland triggered a 290% surge in mortgage borrowing. Separately, Lloyds Banking Group, one of Britain’s biggest home loan providers, reported that 27 March was its busiest day ever for mortgage lending.
However, the number of mortgage approvals for new home purchases – which is an indicator of future borrowing and is seen by many as a better measure of the housing market’s health – fell for the third consecutive month in March, the Bank of England said.
On 1 April this year, the stamp duty discounts became less generous, with the “nil rate” band for first-time buyers falling from £425,000 to £300,000, and other homebuyers seeing a reduction from £250,000 to £125,000.
In the weeks and months running up to 1 April, banks experienced a rush in mortgage applications as homebuyers tried to save themselves thousands of pounds in stamp duty costs by getting their deal done before the deadline.
The Bank of England data showed that net borrowing of mortgage debt surged by £9.7bn to reach £13bn in March. Overall lending at £39.9bn was the highest since June 2021 – which coincided with the end of another stamp duty holiday in England and Northern Ireland on 30 June 2021, during the coronavirus pandemic.
However, many experts were focusing more on the small fall in the number of mortgage approvals for new purchases.
Rosie Hooper, a chartered financial planner at investment firm Quilter Cheviot, said: “This figure dropped by 800 to 64,300 in March, and given those looking to purchase a new home will have to contend with a significantly higher tax bill going forward, we can expect this decline to continue at pace for some time yet.”
Brokers say lenders have been stepping up a mortgage price war, with more providers this week cutting the cost of some of their new fixed-rate deals to below 4%, and a growing number loosening their affordability rules to enable homebuyers to borrow more.
Financial markets are expecting the Bank of England to cut interest rates again on 8 May, which could lead to fresh price reductions on new mortgage deals.
Simon Gammon, managing partner at Knight Frank Finance, said: “Falling mortgage rates will fuel a rise in activity as the year progresses, providing volatility in global trade policy de-escalates and the UK’s economic outlook remains on track.”
The Bank of England figures also showed there was a decline in consumer credit borrowing in March. Net borrowing of consumer credit by individuals fell to £0.9bn from £1.3bn in the previous month, with credit card borrowing falling to its lowest level since April 2024.
John Dentry, product owner at the banking industry’s Current Account Switch Service, said the decline “may reflect a growing sense of caution among individuals”.
