"It was always going to be a challenge to beat March’s stellar performance and sure enough, lending fell back in April."
This was also lower than the £5.7 billion monthly average borrowed in the six months to February 2021.
Despite weaker net lending, both gross lending and repayments remain above levels seen since the start of 2020. The Bank says the recent variability is likely to reflect the reduction in the stamp duty tax, which was initially expected to end in March, but has now been extended to the end of June.
Approvals for house purchase ticked up in April, to 86,900, from 83,400 in March. They have fallen from a recent peak of 103,400 in November, but have remained relatively strong. In February 2020, there were 73,400 approvals for house purchase. Approvals for remortgaging with a different lender remained broadly unchanged at 33,100.
The interest rate paid on newly drawn mortgages fell 7 basis points to 1.88% in April. That is marginally above the rate in January 2020 (1.85%), and compares to a series low of 1.72% in August 2020.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "It was always going to be a challenge to beat March’s stellar performance and sure enough, lending fell back in April. The numbers are likely to have been skewed by the original deadline for the stamp duty holiday with many buyers rushing to complete before the end of March to take advantage. Now that it has been extended, activity has settled down a little, with gross lending and repayments above levels seen since the start of 2020.
"With a number of lenders launching sub-1 per cent products, there is clearly an appetite to lend and cash available to do so. Cheap borrowing rates look set to be with us for a while at least and will continue to support demand for property purchases."
Andrew Montlake, managing director of Coreco, commented: "The mortgage approvals mayhem of March continued in April, as legions of ever more frantic buyers jumped on an apparently unstoppable housing bandwagon. In the past couple of weeks, the extreme lack of stock being reported from estate agents, together with buyers more focused on their summer holiday than the stamp duty holiday, has caused the market to pause for breath. But this may only be a brief pause. We are seeing the initial skirmishes in what could be a protracted Mortgage Rate War."
Nitesh Patel, strategic economist at Yorkshire Building Society, said: "The amount people collectively borrowed to buy houses dropped to £3.3bn in April, to around a third of the record £11.5bn in March, but still remains higher than pre-pandemic levels. The drop-off is likely explained by the original stamp duty exemption deadline, which was originally expected to conclude in March, but has now been extended to June.
“A more accurate measure of market conditions and activity is the volume of mortgage approvals – this figure reached 86,900 in April, a slight increase on 83,400 in March. This contrast demonstrates that buyers were keen to push through higher value transactions ahead of the stamp duty deadline, to ensure they could benefit from the discount. The rush to beat the June deadline continues to fuel demand and we expect June to be another big month, but after that we expect the market to cool as the tax relief is reduced from £500,000 to £250,000. This is likely to impact demand in high value areas such as the South East. Further slowdown in activity is expected when the tax saving is removed altogether at the end of September.
“However, current activity is also being driven by buyers re-evaluating their housing needs, particularly for more space in less densely populated areas, which we believe will continue to be a driver for house purchases after the June and September deadlines."
Jonathan Sealey, CEO at Hope Capital, added: “It is clearly a huge drop from £11.5bn in mortgage borrowing in March to £3.3bn in April, but that statistic alone doesn’t tell the whole story.
“As soon as the Chancellor announced the extension of the stamp duty holiday deadline to the end of June, as an industry we were anticipating a roller coaster pattern to emerge for 2021. And so this fall is likely to be followed by a steady rise hitting a second peak at the end of this month.
“What should come as some reassurance is that mortgage approvals continued to rise in April, which demonstrates an ongoing level of demand from house-buyers.
“People want more out of their home lives and investments now and are increasingly looking to the specialist lending sector to help deliver on those aspirations.”
