Net mortgage approvals for house purchases fell in April to 48,700, down from 51,500 in March, new figures released by the Bank of England (BoE) have indicated.

Approvals for remortgaging, which only capture remortgaging with a different lender, saw a very small increase of 300, however, from 32,200 in March to 32,500 in April.

The BoE’s latest figures showed that borrowing of mortgage debt by individuals also continued to decline from net zero in March to £1.4bn of net repayments in April, the lowest level since July 2021 when the figure sat at £1.8bn of net repayments.

If the period since the onset of the COVID pandemic was to be excluded, the current level of net borrowing of mortgage debt is at its lowest level on record, since the BoE’s series began in April 1993.

Gross lending also decreased from £19.7bn in March to £17.0bn in April, while gross repayments fell for a third consecutive month, to £18.5bn in April.

“The month-on-month reduction in mortgage approvals seen in April was always likely to materialise given the BoE’s decision to increase interest rates just one month prior,” CEO of Octane Capital, Jonathan Samuels.

“What we’re now seeing is a knee-jerk reaction by buyers when facing these higher borrowing costs take shape as a reduction in mortgage market activity.

“The good news is that this is likely to be a temporary reduction as they go back to the drawing board to ascertain just how much they can afford to borrow before returning to the fold.

“However, we've already seen the base rate rise again in May, with a further hike expected this month, so we can expect monthly mortgage approval trends to remain erratic, at best, for the foreseeable future.”

Sirius Property Finance managing director, Nicholas Christofi, added: “Current mortgage market activity levels remain some way off the pandemic pace seen in recent years, with total approvals in April down 26% annually.

“However, while a marginal monthly reduction reflects the uncertainty of the current landscape, almost 49,000 mortgages were approved in April which is by far the second highest level seen so far this year.”

The BoE’s latest figures also revealed that net borrowing of consumer credit by individuals in April remained broadly unchanged when compared to March, at £1.6bn.

This additional consumer credit borrowing in April was split between £700m of borrowing on credit cards and £900m of borrowing through other forms of consumer credit, such as finance and personal loans, as well as car dealership.

According to the Bank’s figures, the annual growth rate for all consumer credit and for other forms of consumer credit stayed constant in April at 7.7% and 5.5%, respectively, while that of credit card borrowing fell slightly from 12.8% in March to 12.7% in April.

During April, the figures also showed that households deposited an additional £3.6bn with banks and building societies, to follow net withdrawals of £3.0bn in March. Within the household deposits measure, net withdrawals of interest-bearing sight deposits decreased significantly from £14.5bn in March to £5.4bn in April.

Head of personal finance at AJ Bell, Laura Suter, said: “Savers continued to move their money into fixed rate accounts to make the most of higher savings rates as many feared peak interest rates were nearing.

“We saw £3.7bn paid into fixed rate accounts in April, as £5.4bn of money was withdrawn from instant access accounts. It’s the sixth consecutive month of outflows from easy access accounts, flying in the face of savers’ usual apathy about moving their savings to get higher rates.

“The amounts being moved out of easy-access accounts and into fixed rate ones were down on March’s figures, but we might see this pick up again if the Bank of England hikes rates, pushing savings rates up further.”

Share Story: