UK mortgage approvals fell to the lowest level in eight months in March despite home buyers rushing to complete property transactions ahead of the stamp duty hike, the latest figures have revealed.
Mortgage approvals dropped 800 to 64,309 in March, which is the lowest level since July 2024, Bank of England said.
The Bank of England data also showed that net borrowing of mortgage debt surged by £9.7bn to reach £13bn in March. Overall lending at £39.9bn was the highest since June 2021 – which coincided with the end of another stamp duty holiday in England and Northern Ireland on 30 June 2021.
But analysts were focusing more on the dip in the volume of mortgage approvals for new acquisitions.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: “UK mortgage approvals – an indicator of future borrowing – fell in March for the third consecutive month despite the surge in buyers racing to beat the deadline to take advantage of the temporary increase to stamp duty thresholds. The data reflects the market returning to a ‘new normal’ as most buyers would have realised March was too late to secure a mortgage and complete the deal before the thresholds reverted to the previous lower level.
“Uncertainty in the wider economy may have also played a part in dampening mortgage market activity in March. Concerns that inflation would edge up over the course of the year, a result of the Autumn Statement tax hikes imposed on businesses by Chancellor Rachel Reeves, and the challenges posed by US President Donald Trump’s trade tariffs, may have been weighing on buyers’ minds as they considered their affordability position.
Higher stamp duty costs are likely to be a challenge for buyers going forward, particularly for first-time purchasers who must not only raise a deposit but also source extra funds to cover a bigger tax bill.”
Stephanie Daley, director of partnerships at Alexander Hall, highlighted the fact that mortgage market activity has been consistently strong since the start of last year, with monthly mortgage approvals remaining above the 60,000 threshold since January 2024.
She said: “This momentum has continued into 2025 despite a slight cooling of the market in the run up to the stamp duty deadline, with buyer confidence boosted by a number of base rate cuts since August of last year. With another cut expected next week, we only anticipate buyer market activity to strengthen as the year progresses.
“We’ve already seen many lenders act in anticipation of a May base rate reduction, with some offering fixed rate deals with sub-four percent interest rates. However, this means that should the base rate fall next week, there’s no guarantee that mortgage rates will follow suit, as these lenders have already factored this into existing offers.”
Simon Gammon, managing partner at Knight Frank Finance, believes that it is likely that the mortgage market will see a lull in next month’s data.
He commented: “Mortgage approvals for house purchase, which fell marginally, offer a better measure of the health of the housing market. Approvals have eased in recent months, but 64,300 still represents robust levels of activity and is broadly in-line with the 66,000 or so approvals that we were seeing in the lead up to the pandemic. Affluent markets driven by needs-based buyers are particularly busy.
“Falling mortgage rates will fuel a rise in activity as the year progresses, providing volatility in global trade policy deescalates and the UK’s economic outlook remains on track. Lenders are engaged in a price war, which has swiftly boosted sentiment among purchasers. Both HSBC and Barclays cut rates this week, following a large repricing by Santander last week. The larger lenders are also rethinking how they approach mortgage affordability testing, which will unlock the prospect of purchasing for many more people.”
Read the orginal article: https://propertyindustryeye.com/home-buyer-mortgage-approvals-dropped-ahead-of-stamp-duty-deadline/
