Mortgage borrowing 'increases sharply' but approvals continue to fall: BoE

Net residential mortgage borrowing increased sharply by £9.7 billion to £13.0 billion in March, according to the latest Money and Credit statistics from the Bank of England.

This follows a decrease in net borrowing of £1.0 billion to £3.3 billion in February. 

The annual growth rate for net mortgage lending rose from 1.9% to 2.7% in March, the highest since March 2023. 

Gross lending also increased significantly to £39.9 billion in March, from £24.9 billion in February, and was the highest since June 2021. Gross repayments also increased in March, to £23.7 billion from £19.8 billion, the highest level of repayments since October 2022.

However, residential mortgage approvals decreased for the third consecutive month, with a fall of 800 to 64,300 in March. By contrast, approvals for remortgaging with a different lender increased by 1,000 to 33,400 in March, following a decrease of 700 in February.

The average interest rate paid on newly drawn mortgages decreased by 3 basis points, to 4.50% in March. Similarly, the rate on the outstanding stock of mortgages was 3.84% in March, compared with 3.87% in February.

CEO of Octane Capital, Jonathan Samuels, commented: “Whilst mortgage approval levels may have softened in recent months, this is almost certainly due to the recent stamp duty deadline and, despite a degree of hesitation on the side of buyers, the level of market activity seen so far throughout 2025 has remained robust.

"This demonstrates that buyers are acting with a far greater degree of confidence since interest rates stabilised and, indeed, started to fall.

"Today’s figures demonstrate more of the same with over 64,000 mortgages approved in March, suggesting that it’s already shaping up to be a positive year for the property market.

"With the prospect of further base rate reductions to come, the outlook for the year ahead is very positive indeed.”

Tomer Aboody, director of MT Finance, said: “With net borrowing increasing in March but approvals falling, this is further evidence of how the housing market reacts to stamp duty changes.

“With the end of the stamp duty holiday looming, many buyers pushed transactions through in March in order to save themselves money. With fewer approvals for house purchases for several consecutive months, we are seeing the effects of constantly hitting would-be buyers can have."

Emma Cox, MD of real estate at Shawbrook, added: “Despite the impending removal of stamp duty relief for first-time buyers, approvals dipped slightly as high house prices and interest rates remain unpredictable. 

“A lack of any further incentives for first-time buyers in the recent Spring Statement will likely lead to a drop-off in mortgage applications and approvals in the coming months as affordability challenges bite and first-time buyers take time to assess their plans. Having a quality private rental market is therefore vital, and professional landlords are leading the way to provide quality, energy efficient homes for renters. In the face of economic challenges, and higher taxation and regulation, landlords need the support of government to continue to provide high quality housing to renters across the UK."