Mortgage borrowing reaches record £11.8billion high in a month

Mortgage borrowing reaches record £11.8billion high in a month as housing market is fuelled by stamp duty holiday and low mortgage rates

  • Figures show net mortgage borrowing is at the highest since records began
  • Housing experts say home owners are taking advantage of low mortgage rates 
  • The break from stamp duty is also sending borrowing soaring across the UK 

Net mortgage borrowing reached a record £11.8 billion in March – the highest figure since records began.

Data released by the Bank of England shows that borrowing peaked in the same month that one in six homes were sold for above asking price.

Experts have said it shows that home owners are taking advantage of low mortgage rates to improve their properties. 

The high amount of lending comes from a total of 82,700 mortgage approvals that were made to home buyers in March.

Mortgage borrowing is now at the highest it’s ever been since records began 28 years ago (shutterstock)

The number of mortgage approvals is lower than the recent peak of 103,100 in November 2020, showing that amounts being borrowed is soaring.

One in six homes sold for above asking price last month – the highest proportion for seven years as house market shows no sign of cooling 

One in six homes were bought in March for more money than the amounts that sellers were originally asking for, according to estate agents.

It marked the highest proportion of homes selling for above the asking price in about seven years.

The number of sales agreed was also the highest for the month of March since 2007, NAEA (National Association of Estate Agents) Propertymark said.

An average of 12 sales were agreed per estate agency branch – the highest figure for March since 2007 when the number was also 12.

More than a quarter (27%) of sales in March were made to first-time buyers – the highest figure since June 2020.

Households continued to pay back more than they borrowed in March for non-mortgage lending too.

A net consumer credit repayment of £535 million was recorded, including people’s borrowing using credit cards, personal loans and overdrafts.

The stamp duty holiday was due to end in March but was extended, which is also considered to be a contributing factor.

And in April, a string of lenders launched 5% deposit mortgages as part of a Government-backed scheme.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: ‘The strength of the runaway housing market is being reflected in the mortgage data, with strong levels of borrowing in March. 

‘With home owners borrowing an additional £11.8 billion, taking net borrowing to its strongest level since the series began in 1993, those who are not moving are taking the opportunity to improve, with cheap mortgage rates helping them make this decision.

‘With the stamp duty holiday originally expected to end in March, this focused borrowers’ minds and helps explain the uplift in lending. 

‘Now that this has been extended we expect activity to continue to be brisk over coming months, particularly as mortgage rates are likely to remain low and with increased availability of high loan-to-value deals.’

Another expert speculated that lenders are giving more ahead of an expected slow-down.

The number of mortgage approvals is lower than the recent peak of 103,100 in November 2020, showing that amounts being borrowed is soaring (shutterstock)

Simon Gammon, managing partner at Knight Frank Finance, said: ‘The property market is red hot as home seekers that put off moves during the worst of the crisis are now out-buying. 

‘Brightening economic sentiment alongside big changes to styles of working and living and limited stock availability is a potent mix likely to drive activity and house prices well into the summer months.

‘We do expect activity to begin slowing at that point. We’re already seeing more houses put on the market that will redress the supply imbalance and activity will naturally slow as the bulk of buyers that put off moves find new places to settle.

‘The lenders know this and are taking the opportunity to build market share by offering competitive rates and increasing product choice.’

The news comes after it was reported that one in six homes were sold in March for above the asking price

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors, said: ‘Buyers are determined to move even though many know the logjam in the system will mean they won’t be able to take advantage of the stamp duty concession before the tapering begins at the end of June.

‘Looking forward, we don’t expect much to change although prices will probably soften rather than correct as more people’s requirements are satisfied and balance between supply and demand returns.’

Records for mortgage borrowing began in April 1993, under the Bank of England’s Money and Credit department.  

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