Mortgage borrowing up in March, but house purchases down: Bank of England

Mortgage market activity picked up in March, following a weak February, according to figures from the Bank of England.

The bank’s Money and Credit report found that households borrowed an extra £4.1bn secured against property in March, compared to £3.3bn in the previous month. The annual growth rate of mortgage lending was 3.3 per cent. It has been around 3 per cent since the start of 2016, and remains modest compared to the pre-crisis period.

The number of mortgages approved for house purchase, an indicator of future mortgage lending, fell by about 3,000 in March to 62,300. The number of approvals for remortgaging increased slightly, to about 49,700.

The report also found that remortgage lending in March was £8.9bn, up from £8.8bn in February. The total number of remortgages in March was 49,713, up from 49,289 in February.

LMS chief executive officer Nick Chadbourne says: “Remortgaging activity remains around the six-month average of £8.8bn as we see low interest rates continue to attract borrowers to long-term fixes when their current deal expires. As a result, many homeowners are also choosing to stay put rather than move in a subdued property market.

“April will likely be a strong month for completions, but new enquiries are expected to tail-off. However, as we move into summer, both are likely to build again, delivering a surge in demand for mortgage brokers, lenders, and conveyancers.

Legal & General Mortgage Club director Kevin Roberts says: “Amid wider uncertainty, activity in the mortgage market remains steady. The growing number of products available and increasingly competitive rates, particularly at 95 per cent loan-to-value, continue to entice those looking to take their first steps. Similarly, with many borrowers’ two-year fixed terms coming to an end last month, we expect to see growth in remortgage activity as they hurry to lock into competitive rates while they last.”

The Bank of England’s Money and Credit report compiles monthly statistics on borrowing and deposits by households and businesses and uses them to understand economic trends and developments in the banking system.

The March report also found that that consumer credit increased by £0.5bn in March, the lowest increase since November 2013. The weakness was largely due to a fall in new lending for car finance.

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