£12bn Mortgage Borrowing Record

According to Bank of England figures, UK homeowners borrowed a record £11.8 billion more on mortgages than they repaid in March.

Since comparable data began in 1993, this net borrowing level was the highest of any month.

Low mortgage rates and stamp duty holidays have encouraged homeowners to move before the stamp duty holiday deadline or by borrowing more money to improve their current property at low interest rates.

Nationwide Building Society on Friday said “the average property price has now risen to £238,831 in the year to the end of April that’s a rise of £15,916”.

Analysts have said the UK housing market has been 'boiling' during the Spring and even greater mortgage borrowing signals future demand to buy homes.

As some people tried to take advantage of the stamp duty holiday, which was then extended in England, Wales and Northern Ireland, March saw gross mortgage borrowing reach £35.6 billion. 

April also saw some High Street mortgage lenders now offering mortgages with just a 5% deposit under the government guarantee scheme which helps first-time buyers and is available to anyone purchasing a property up to £600,000.

The government will offer a partial guarantee, generally 15% to compensate lenders should the borrower default on repayments.  The scheme is not available for second home or buy to let purchasers.

House buyers, especially first-time buyers could be helped by families and individuals towards their deposit, after The Bank of England data shows £16.2 billion more was deposited than withdraw into accounts and remained strong throughout March.

The Bank said households continued to pay back more than borrowed n mortgage debt in March and a Net consumer credit repayment of £535 million was recorded that included peoples borrowing using credit cards, overdrafts, and personal loans.

Comment

We have to say the property boom in between lock downs surprised us.  That said, with inflation to come, longer term property prices will boom but there will be a property bubble that bursts at some point and negative equity will come back to haunt the markets.  Thet said, any crash will still then turn to longer term growth.