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This morning, the Bank of England have said net borrowing amounted to £7.0 billion in March, up from £4.6 billion in February. Mortgage approvals for house purchases were little changed at 70,700 in March, and remain above the 12-month pre-pandemic average up to February 2020 of 66,700.

Net borrowing of mortgage debt by individuals increased to £7.0 billion in March, up from £4.6 billion in February, and remains above the pre-pandemic average of £4.3 billion in the 12 months up to February 2020.

Gross lending rose slightly to £26.5 billion in March from £26.0 billion in February, while gross repayments fell to £19.7 billion in March from £21.0 billion in February.

National Landlord Investment Show – MPU

Approvals for house purchases, an indicator of future borrowing, were little changed at 70,700 in March, from 71,000 in February, and remains above the 12-month pre-pandemic average up to February 2020 of 66,700.

Approvals for remortgaging (which only capture remortgaging with a different lender) rose slightly to 48,800 in March. This remains below the 12-month pre-pandemic average up to February 2020 of 49,500, but is the highest since February 2020 (52,100).

The ‘effective’ interest rate – the actual interest rate paid – on newly drawn mortgages increased by 14 basis points to 1.73% in March. The rate on the outstanding stock of mortgages ticked up 2 basis points to 2.04% in March.

Simon Gammon, Managing Partner, Knight Frank Finance, commented:

“Demand on the purchase side remains strong but we are just beginning to see some subtle signs of slowing.

Rising mortgage rates and uncertainty over the economic outlook is clearly taking a toll on sentiment and we expect mortgage approvals to fall in the months ahead before settling at longer term norms.

A boom in remortgaging is underway as borrowers clamour to lock in fixed deals before rates rise even further.

The Bank of England remortgaging data only captures deals when borrowers stay with their currently lender so undershoots the ground swell of activity underway.

Another hike in the base rate is overwhelmingly likely tomorrow.

If the Bank of England indicates that it’s likely to take a more aggressive approach to combat inflation we’d expect to see an immediate impact in the mortgage market.

Lenders are already repricing products on a weekly basis so borrowers have got to move quickly if they want to secure a good rate – this isn’t something you can put off until tomorrow.”

Joshua Elash, director of property lender MT Finance, said:

“Mortgage approvals for house purchases remain strong as homeowners and investors alike focus on taking advantage of low interest rates while they can, in expectation of further rate rises in the months ahead.

We expect this trend to continue as an increasing number of prospective buyers attempt to lock into a fixed-rate mortgage on a new property, while they get ahead of the impact inflation is going to have on increasing house prices.

More than ever, this is the time to buy.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said:

“The Bank of England records a pick-up in net borrowing of mortgage debt in March, while mortgage approvals were little changed and remain above the 12-month pre-pandemic average.

This suggests that the froth has come out of the market, leaving a calmer, more measured, and ultimately more sustainable version.

With the markets expecting another interest rate rise this month, brokers are being kept busy.

Borrowers are increasingly concerned about rising mortgage rates and are keen to secure a fixed rate in particular before they rise further.

With lenders pulling some deals with little or no notice, decisions have to be made quickly.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, commented:

“Market talk recently has been all about the impact on house prices of recent increases in interest rates and the cost of living.

However, in many ways the mortgage numbers can be a more useful indicator of future market health.

This latest report from the Bank of England is no exception and shows that although approvals are still comfortably above pre-Covid levels they are not rising as quickly as we might have expected in the particularly strong spring season.”

CEO of Octane Capital, Jonathan Samuels, commented:

“While overall property market sentiment remains very good, a dip in the level of mortgages being approved was always likely to follow such a sustained period of heightened market activity.

This has been largely due to lenders tightening their belts following a number of consecutive base rate increases and we’re now starting to see this more cautious approach to lending start to materialise within topline market statistics.

With the cost of living also putting pressure on many households, this slow but steady decline in buyer activity is a trend we expect to see maintained throughout the remainder of the year.”

Director of Benham and Reeves, Marc von Grundherr, commented:

“Many lenders are now acting with a far greater degree of caution and for prospective buyers this means fewer product options at higher rates.

This has inevitably reduced the number of buyers being approved for a mortgage, although those that have are still able to take advantage of a relatively affordable cost of borrowing.

Of course, while current mortgage rates still remain fairly favourable, we expect that they will continue to climb throughout the remainder of the year.

So those considering a purchase would be best advised to act now as they may well find the offer presently on the table won’t be there in a month or two.”

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