Net borrowing of mortgage debt by individuals increased to £7.0bn in March, a figure up from £4.6bn in February, new Bank of England (BoE) figures have confirmed.

March’s total remains above the pre-pandemic average of £4.3bn in the 12 months up to February 2020.

The BoE’s data also revealed that gross lending increased slightly to £26.5bn in March, up from £26.0bn in February, while gross repayments fell to £19.7bn in March, down from £21.0bn in February.

Approvals for house purchases, which the BoE uses as an indicator of future borrowing, showed little change at 70,700 in March, having stood at 71,000 in February. This figure also remains above the Bank’s 12-month pre-pandemic average up to February 2020, of 66,700.

Furthermore, approvals for remortgaging, which only capture remortgaging with a different lender, rose slightly to 48,800 in March. This figure is below the 12-month pre-pandemic average up to February 2020 of 49,500, but is the highest tally since February 2020 when it stood at 52,100.

Commenting, Just Mortgages national operations director, John Phillips, said: “Outside of the stamp duty inflated peaks, March saw the highest spike in net lending as continually increasing house prices drove up mortgage borrowing.

“While approvals remain steady, the spike in net borrowing shows consumers are looking to borrow more than ever. Competition for houses is still driving up prices, and with more sellers than buyers this looks set to continue.  

“With the Chancellor warning that there may be seven more base rate rises before the end of the year, taking it to 2.5%, advice from brokers has never been more critical. The ‘effective’ interest rate rose in March and with the ongoing cost of living crisis, borrowers will be looking for advice on how to achieve long-term security in household expenses.

“Anecdotal feedback from our network of brokers reveals a push towards fixing rates for longer in the hope that the financial landscape will be less turbulent in a few years.”

The BoE also released statistics concerning consumer credit, which showed that individuals borrowed an additional £1.3bn in consumer credit during March, on net, following £1.6bn of borrowing in February. This figure is still higher than the 12-month pre-pandemic average up to February 2020 of £1.0bn.

According to the data, the additional borrowing in March of consumer credit was split between £800m on credit cards, and £500m through other forms of consumer credit, such as car dealership finance and personal loans.

Furthermore, the annual growth rate for all consumer credit increased to 5.2% in March from 4.5% in February; which is the highest rate since February 2020. The BoE also stated that annual growth rates of credit card borrowing and other forms of consumer credit were 10.6% and 3.0% respectively.

“To put this in perspective, card borrowing is rising from a real low, and we still have less outstanding on our cards than we did before the pandemic,” commented Hargreaves Lansdown senior personal finance analyst, Sarah Coles. “The rise in card spending was also far lower than in February, so we’re not seeing uncontrolled desperation in action.

“Instead, this is a steady drip of increased borrowing, month after month, that tends to come alongside rising prices.”

Coles added: “Credit cards feel like a solution in the short-term, but when you’re having to pay interest on your debts, it makes it even harder to make ends meet. And while prices continue to rise, stretching your money to cover your bills and your debts is going to get more difficult every month.”

Share Story: