UK mortgage borrowing hits highest levels since records began in 1993

Lucy Harley-McKeown
·2-min read
New Bank of England data bolsters recent reports about the UK's stampede to buy homes before the end of the stamp duty holiday. Photo by Matt Cardy/Getty Images
New Bank of England data bolsters recent reports about the UK's stampede to buy homes before the end of the stamp duty holiday. Photo by Matt Cardy/Getty Images

Figures released on Tuesday morning showed mortgage borrowing in the UK hit £11.8bn ($16.4bn) in March, the strongest month since records began in 1993. The previous peak was in October 2006 at £10.4bn.

Data released by the Bank of England showed mortgage approvals for house purchases were 82,700 in March, lower than the recent peak of 103,100 in November 2020, but higher than in February 2020 (73,000).

Meanwhile, individuals continued making net repayments of consumer credit in March amounting to £500m.

The effective rate on new personal loans remained low at 5.03%, compared to 7.03% in January 2020, the Bank said. 

Watch: Why are house prices rising during a recession?

The data bolsters recent reports about the UK's stampede to buy homes before the end of the stamp duty holiday — a discount brought in by Rishi Sunak to support the market under strain from the COVID-19 pandemic. 

The tax break can mean a saving of up to 12% on the UK's most expensive properties. 

Figures released by housing website Zoopla at the end of April showed demand for UK property is up 27.5% year to date in 2021 when compared with average levels in 2020.

Read more: UK manufacturing growth hits seven-month high spurring jobs creation

Zoopla found the UK housing market recorded £149bn worth of property sales in the first 15 weeks of 2021, almost double the value of homes sold in the same period in 2020 and 2019.

April also saw the highest monthly rise in average UK house prices in 17 years.

According to the latest Nationwide house price index annual house price growth rebounded to 7.1% in April, from 5.7% in March.

The average price in April stood at £238,831 ($332,300). This was up 2.1% compared with March and up £15,916 over the past 12 months.

Nationwide's data covers the period UK chancellor Rishi Sunak extended the tax break until June, as well as a new 95% mortgage guarantee scheme to help those with a 5% deposit get on the property ladder.

The hot property market has also helped buoy banks' financial results. Britain's major UK banks — Lloyds (LLOY.L), HSBC (HSBA.L), NatWest (NWG.L), Barclays (BARC.L) — all delivered forecast beating results, partially propped up by the housing rush.

Watch: How much money do I need to buy a house?