The number of mortgage approvals for house purchase experienced a sharp fall during April to 15,800, a figure around 80% below the level recorded in February, new Bank of England (BoE) statistics have revealed.

The BoE suggested this was around half the number of approvals it recorded as the trough during the financial crisis, and the lowest since it began recording the series in 1993.

Approvals for remortgages – which include remortgaging with a different lender only – have fallen by less, to 34,400, which the BoE indicated was a figure 34% lower than in February.

TMA director of mortgage services, David Copland, commented: “April saw a major shift towards refinancing as lenders and advisers adapted to the constraints presented by the coronavirus outbreak. However, it’s been encouraging to see advisers once again focus on incoming applications, as well as cases which were previously on hold, since the housing market reopened for new business.
 
“However, as the focus on new business resumes, it will be crucial that brokers do not lose sight of their existing clients. Now is the time for advisers to be keeping in touch with current clients and reviewing any change in their circumstances – particularly if they have been impacted by the pandemic.

“Technology will go a long way towards helping brokers to do this, ensuring they can easily keep on top of their client portfolios and better support customers, both current and new, during this uncertain time.”

The figures also showed the cost of credit fell in April. For individuals, effective rates on overdrafts fell 15 percentage points. The interest rate on new fixed-rate mortgages was little changed, but the BoE data showed that floating-rate mortgage borrowing rates fell by 46 basis points.

The interest rate paid on new borrowing by businesses also fell by 10 basis points, with larger falls on rates for SMEs.

AJ Bell personal finance analyst, Laura Suter, said: “Lots of people are using lockdown to reduce their spending, shore up their savings and cut their debt, in order to get their finances in better shape for the predicted recession to come.

“The figures from the BoE show that as a nation we paid off £5bn in credit card debt in the past month, more than double the record £2.4bn we paid off in March and far ahead of the usual £300m that’s paid off each month. However, we still have a long way to go with £64bn left to pay off on credit cards.

“The lockdown has created a divide in the country, with some households seeing cuts to income, job losses or being furloughed, while others are seeing their finances benefit from an enforced halt to much of their spending.”

more2life CEO, Dave Harris, added: “Today’s figures are testament to the cooperation between advisers and lenders in ensuring that customers could continue to access the refinancing solutions they needed throughout April while the market adapted to the COVID-19 outbreak.

“This same cooperation can still be seen as the housing market begins to return to some sense of normality, with the industry working hard to ensure that both existing and new borrowers can proceed efficiently during this challenging time.”

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