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Mortgage borrowing in the UK surged to its highest level in four years in March, as buyers raced to complete property purchases before changes to stamp duty thresholds came into force at the end of the month.
Figures released by the Bank of England on Thursday showed that net mortgage borrowing rose by £9.7bn to £13bn in March — the sharpest monthly increase since the end of the last stamp duty holiday in June 2021. Total lending hit £39.9bn, also the highest level since the post-pandemic property rush, driven by the so-called “race for space”.
Buyers were facing a sharp tax increase from 1 April, when the nil-rate threshold for stamp duty was cut from £250,000 to £125,000. First-time buyer relief was also reduced, lowering the tax-free limit from £425,000 to £300,000, with the maximum property value eligible for any relief falling from £625,000 to £500,000.
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While demand for mortgages remained strong, the number of approvals dipped slightly to 64,309 in March, down from 65,093 in February and marginally below consensus forecasts of 64,800. HMRC data showed a corresponding surge in completed sales, with 177,370 transactions in March — more than double the 86,810 recorded in the same month last year.
“The data reflects the market returning to a new normal,” said Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners. “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.”
Remortgaging activity also saw a modest uptick, with 33,400 approvals in March, according to the central bank’s Money and Credit report. This figure only includes those refinancing with a new lender.
Households’ deposits with banks and building societies increased by £7.4bn in March, following net deposits of £5bn in March. Within the latest figure, households deposited an additional £4.2bn into ISAs as the tax year neared an end.
Laura Suter, director of personal finance at AJ Bell, said: “If you want one figure to sum up the apathy of the UK’s savers, it’s the fact that £280bn is sitting in accounts earning absolutely no interest, at a time when interest rates are north of 5% for some savings accounts.
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“The latest Bank of England data to the end of March shows that there is a mountain of cash paying no interest, which has ballooned in recent years despite the Bank of England’s base rate rising and savings rates remaining decent. The pile of cash getting no return has grown in the past year, by £51bn.