BBA: UK high street banks approved fewer mortgages than expected in April as stamp duty surge ends
The number of mortgages approved by high street banks last month fell more than expectations, after a surge in the start of the year driven by the rush to buy before new stamp duty charges came in.
BBA figures out this morning show that the number of mortgages approved in April fell to 40,104 – a 13-month low – down from 43,854 in March.
Forecasts had suggested it would drop to around 44,800 for the month.
Numbers were also around six per cent lower than in April 2015, although remortgaging approvals were 16 per cent higher.
Gross mortgage borrowing rose 12 per cent year-on-year to £12bn.
"As expected, this was a slower month, following the inflated lending activity associated with borrowers completing purchases ahead of the stamp duty increase," the BBA said.
Net mortgage borrowing is running around three per cent higher than a year ago, with consumer credit up around five per cent "reflecting improved confidence and in the case of personal loans and overdrafts favourable interest rates," the body added.
Isa deposits only grew by £3bn over the March and April investment period, compared with £6.2bn in the same period of 2015.
Dr Rebecca Harding, chief economic adviser at the BBA, said: “As expected, growth in mortgage lending has fallen back sharply on last month proving that March’s results were just a stamp duty spike. Net mortgage borrowing is nevertheless three per cent higher than a year ago.
“Separately, the fact that personal deposits are growing while Isa deposits continue to disappoint suggest consumers are using easy-access savings while the outlook for the economy remains uncertain. The increase in real wage growth may start to have positive knock-on effects on long-term savings if it is sustained.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said the drop in approvals was "inevitable" – although noted that figures were still up on last year, when purchases were dampened by the general election.
"This year it’s the turn of the EU referendum to create uncertainty and give investors the jitters. However, the referendum can’t be wholly blamed for the perceived slow down," he added. "More importantly, general confidence in the economy, both domestically and globally, as a whole has fallen. Activity at the top end of the market is muted as it comes to terms with higher stamp duty."
Howard Archer, chief UK and European economist at IHS Global Insight, added: "The strong suspicion is that housing market activity will be pressurised in the immediate term by a combination of weakened interest from the buy-to-let and second home sectors as well as heightened concerns and uncertainties over the UK economic outlook, particularly in the run-up to June’s referendum on EU membership.
"Consequently, house prices may well be softer over the next few months. Indeed, house price data for April from both the Halifax and Nationwide were markedly softer… Nevertheless, we expect housing market activity and prices to regain limited momentum in the second half of 2016 on the assumption that a vote to stay in the EU reduces uncertainty and supports a pick-up in economic activity.
"High employment, decent purchasing power and low interest rates should underpin house buyer interest once the referendum fog has disappeared."