UK Mortgage Approvals See Slight Dip in April

The UK mortgage market witnessed a slight decline in approvals in April, according to the latest data released by the Bank of England. The number of mortgage approvals dropped to 61,100 from 61,300 in March, falling short of the forecasted 61,500.

Mortgage lending increases despite dip in approvals

Despite the decline in approvals, mortgage lending increased to £2.4 billion in April, with the annual growth rate rising to 0.2% - the first annual increase since October 2022. Gross lending also rose to £20.6 billion, its highest level since January 2023.

Net consumer credit borrowings, on the other hand, halved to £0.7 billion from £1.4 billion in March, reflecting lower net borrowing through credit cards and other forms of consumer credit.

Households deposit record amounts in ISAs

Households deposited a record £11.7 billion into tax-free Individual Savings Accounts (ISAs) in April, the highest on record. This, combined with a £8.4 billion increase in households’ holdings of money, suggests that households are taking advantage of higher interest rates.

Businesses, however, repaid £1.1 billion of loans to banks and building societies, slightly up from £0.9 billion in March. Borrowing by large businesses decreased 0.3%, while lending to SMEs slid 4.6% annually in April.

Economist predicts cooling housing market

According to Capital Economics’ economist Ashley Webb, the recent rebound in the housing market is cooling, and households are reining in their spending in April. However, Webb still expects interest rate cuts starting in the summer and further falls in inflation to mean the economic recovery this year will be stronger than most expect.