Lenders issued £39.9bn in gross mortgage lending in March, a notable rise from £24.9bn in February and the highest amount lent since June 2021, data from the central bank showed.
This was also significantly up on the same month last year, when gross mortgage lending totalled £20.1bn.
The Bank of England Money and Credit data revealed a rise in gross mortgage repayments, jumping from £19.8bn in February to £23.7bn in March. This was also the highest level of repayments since October 2022.
The net borrowing of mortgage debt rose from £9.7bn to £13bn month-on-month, following a £1bn decrease to £3.3bn in February.
The annual growth rate for net mortgage lending increased from 1.9% to 2.7%, the highest in two years.
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Rise in remortgage activity, fall in purchases
Despite the rise in the value of gross mortgage lending, approvals for house purchases fell for the third month in a row.
There were 800 fewer mortgages approved for house purchases in March than in February, at a total of 64,300. By contrast, approvals for remortgages rose by 1,000 to 33,400, following a decline of 700 reported in February.
Jeremy Leaf, North London estate agent and a former Royal Institution of Chartered Surveyors (RICS) residential chair, said the mortgage approval figures were “interesting” as they “reflect the period when it almost certainly became impossible to take advantage of the stamp duty concession”.
He added: “Although the sharp increase of net borrowing of mortgage debt by individuals shows that so many transactions were brought forward, it is also clear that buying and selling remained fairly robust despite continuing concerns. These included not only the loss of the stamp duty discount but the pace of likely base rate reductions, as well as economic uncertainty both here and abroad.”
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said this was a sign that the market was returning to the new normal, as most buyers in March would have realised they would not benefit from the higher stamp duty threshold.
The average interest rate paid on newly drawn mortgages fell by 17 basis points to 4.73%, while the average rate on the outstanding stock of mortgages rose by two basis points to 3.5%.
Haine added: “The outlook for interest rates looks promising for buyers. The base rate remained on hold in March as the Bank of England sought to curb inflationary pressures, but the markets are expecting a fourth 25 basis point rate cut next week. This would take the base rate down to 4.25%, potentially improving mortgage options for new buyers and those looking to refinance.
“Affordability is improving, particularly as some lenders relax their lending criteria, but borrowing costs remain high, when compared to the very early 2020s when the Bank of England lowered the headline rate to just 0.1% at the height of the Covid-19 pandemic.”
