Bank of England: Mortgage Borrowing Hit an All-Time High in March

mortgage borrowing high

New figures published by the Bank of England suggest mortgage borrowing hit an all-time high in March this year. Official data shows that property owners in the UK borrowed around £11.8 billion more on mortgages than they repaid in March, the highest monthly net borrowing total since records began.

Analysts have since commented on the government’s temporary stamp duty holiday as the primary catalyst for the spike in borrowing, coupled with rock-bottom interest rates and the availability of competitive deals.

Borrowers across the country raced to beat the original March 31 stamp duty holiday deadline, which was subsequently extended to September 30. A major spike in borrowing and property purchase interest has resulted in a market described as “on the boil” by Nationwide, which recently published figures suggesting a new average property price in the UK of £238,831, an increase of almost £16,000 since the same time last year.

In total, gross mortgage borrowing for March hit £35.6 billion, fuelled by a wave of last-minute activity as buyers desperately sought to take advantage of the temporary stamp duty discount.

The stamp duty suspension scheme is an undeniable success.

This mad March mortgage data highlights the frenzied rush of people to buy in the second half of last year and save thousands of pounds on stamp duty.

“But the celebrations surrounding the stamp duty holiday may soon ring hollow if the market cools off and people find their savings have been wiped out by the premium they have paid for their property.

While an inevitable slowdown is predicted for later in the year, analysts expect the next few months to bring further house price growth in most key areas of the country. First-time buyers in particular are likely to be motivated by the reintroduction of the 95% LTV mortgage, enabling properties to be purchased with a down payment of just 5%.

Having largely disappeared from the market last year, the return of the 5% mortgage was spurred by the introduction of a new government guarantee scheme for lenders taking part in the initiative. First-time buyers and movers will both be able to qualify under the initiative, which is available for mortgages up to a maximum value of £600,000. However, second homes and buy-to-let properties are excluded from the scheme.

Meanwhile, Bank of England data suggests that consumer saving was particularly strong last month, with approximately £16.2 billion more being deposited in accounts than withdrawn during March. A net consumer credit repayment of £535 million was also recorded.