Net residential mortgage borrowing "decreased sharply" by £13.7 billion to -£0.8 billion in April following the introduction of additional stamp duty costs, the latest Money and Credit data from the Bank of England shows.
This followed an increase in net borrowing by £9.6 billion to £13 billion in March as buyers raced to beat the stamp duty deadline.
Gross lending decreased significantly to £16.9 billion in April, from £39.9 billion in March, which was the greatest fall since June 2021. Gross repayments also decreased in April to £18.4 billion, from £23.7 billion.
Net residential mortgage approvals fell for the third consecutive month, down by 3,100 to 60,500 in April. By contrast, approvals for remortgaging with a different lender increased by 1,600 to 35,300 in April, following an increase of 1,000 in March.
The average interest rate on newly drawn mortgages fell slightly to 4.49% in April. However, the rate on the outstanding stock of mortgages increased to 3.86% from 3.84%.
Nathan Emerson, CEO of Propertymark, commented: “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.”
Richard Donnell, executive director at Zoopla, said: "A slowdown in demand for mortgages in April reflects the impact of a late Easter. We expect mortgage data for May to increase in line with a pick up in new sales being agreed, which are running at their highest level for four years. A key factor is also lenders relaxing affordability tests, which is delivering the average home buyer up to 20% more borrowing capacity compared to a few months ago. We expect a busy June as buyers look to secure sales before the summer holidays kick in."
