The number of mortgage approvals for house purchases continued to rise in February and reached 73,500, new statistics published by the Bank of England (BoE) revealed.

The new data, which the BoE noted was for the month of February and therefore largely unaffected by the impact of the coronavirus outbreak, also revealed approvals for remortgage had risen on the month to 53,400.

Net mortgage borrowing by households – which lags approvals – was £4.0bn in February, close to the £4.1bn average seen over the past six months, while the bank’s data also showed the annual growth rate for mortgage borrowing picked up to 3.5%.

Coreco managing director, Andrew Montlake, commented: “Never before has such strong mortgage approvals data rung so hollow. It feels like it came from another time.

“Within just a few weeks, the property and mortgage markets have gone from strength to abject uncertainty. To say the property market is in uncharted territory is an understatement.
 
“We’re confident things will eventually get back on track but the great unknown in the current highly fluid environment is when. The hope is that the mortgage market rebounds as fast as it is deteriorating once we come out the other side of Covid-19. For now, the most important thing is that every lender supports borrowers as best it can in these most challenging times.”

The latest BoE data also revealed the extra amount borrowed by consumers in order to buy goods and services fell to £0.9bn in February – slightly below the £1.1bn average seen since July 2018. Within this, net borrowing on credit cards was zero, which the bank indicated was weaker than recent months.

The BoE’s quoted £0.9bn was fully accounted for by other loans and advances, with the bank suggesting these slightly weak flows in February meant the annual growth rate of consumer credit fell to 5.7% in February – slightly below the level it had been hovering around since May 2019.

Killik & Co head of wealth planning, Svenja Keller, added: “The fact that there was no additional credit card debt allows us to question the other options many are using, including more expensive payday lenders and overdraft options.

“February will have already seen a decline in spending due to Covid-19. Travel plans and other bigger expenditure would have started to be put on hold due to the uncertainty. Going forward, there are two options: many people will have to borrow money for everyday expenditure given that they may have lost their jobs or do not yet have access to government help.

“Equally, people are spending a lot less so it is also possible that less borrowing is going to happen over the next few months – next month’s figures will be very interesting.”

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