Mortgage borrowing slowed in April as higher mortgage rates weighed on affordability, but an increase in approvals for house purchases suggests demand in the housing market remains resilient.

According to the latest Bank of England (BoE) Money and Credit data, net mortgage borrowing fell to £4.4bn in April from £6.8bn in March, dropping below the previous six-month average of £5.1bn. However, mortgage approvals for house purchases rose to 65,900, above the recent six-month average of around 63,100, while re-mortgaging activity remained broadly unchanged.

Consumer credit borrowing held steady at £1.9bn, with increased use of credit cards offset by weaker demand for other forms of borrowing such as personal loans and car finance.

BoE figures also showed lending growth across households and businesses slowed in April, while household deposits remained strong, supported by £12bn of net inflows into ISAs.

Reacting to the BoE's latest figures, Richard Pike, chief sales and marketing officer at Phoebus Software, said: “After a strong Q1, which saw demand rise to a one-year high in March, it’s no surprise that mortgage borrowing dropped back in April as the impact of the Iran crisis sent mortgage rates higher, affecting affordability. However, despite the monthly fall in net borrowing, mortgage approvals were up, demonstrating the resilience of the housing market."

Pike said improving economic conditions and signs that interest rates are stabilising could help support affordability and encourage a recovery in market activity over the coming months.

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