Britain’s Mortgage Boom Takes a ‘Pause’ After Record Borrowing Month

Britain’s mortgage boom cooled slightly throughout April despite house prices continuing to race ahead.

New figures from the Bank of England show mortgage borrowing fall back to £3.3 billion in April, down from a record £11.5 billion in March. Mortgage approvals had slightly risen to 86,900 and remained above pre-pandemic levels but were well below the peak of 103,400 which was seen in November 2020.

According to the Bank of England, this short-lived spike in borrowing during March was likely caused by the Stamp Duty holiday, which was set to end in March but has now been extended to June.

April’s borrowing figure was below the six-month average which was seen before the COVID-19 pandemic began. However, gross lending remained elevated, and the net figure was suppressed by unusually high repayments. Experts believe that the recent property market boom could continue.

It has been identified that homeownership is the real aspiration for many young people and what can be seen in the mortgage market is a growing pool of ready-to-react first time buyers, cash rich after a year of limited spending, desperate to buy a property of their own and get onto the property ladder and invest rather than rent a property.

The new mortgage data, which was published recently, comes shortly after the announcement of the strongest annual house price growth in seven years. To learn more about this, please read our recent blog post.

The property market has been juiced as a result of low interest rates, a shortage of houses on the market, and excess savings built up through the pandemic. The surging prices has sparked some concern from the Bank of England. However, this is being closely monitored for signs of sustained inflation.

Due to the lack of stock at many estate agents, together with buyers becoming more focussed on summer holidays rather than the Stamp Duty holiday, it has caused the market to pause for breath. This may only be a brief pause, as data suggests that this boom could continue.

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