UK mortgages fall in March, Bank of England data reveals

Mortgage approvals for house purchases in Britain unexpectedly fell in March as the surge at the start of the year subsided ahead of higher taxes, data from the Bank of England revealed.

The number of mortgage approvals came to 71,357 last month, down from 73,195 in February. Analysts had pencilled in 74,400 approvals.

“Although the number of approvals remains high relative to the recent past, it is clear that the spike around the start of the year generated by buyers entering the market in an attempt to transact before April’s stamp duty changes for buy-to-let investors has well and truly passed,” according to Oliver Jones, economist at Capital Economics.

The government introduced extra stamp duty on buy-to-let properties and second home purchases on 1 April, which boosted demand in the market in the preceding months.

Data from Nationwide on Thursday showed the annual pace of house price growth eased to 4.9% in April after a 5.7% increase in March as the mad rush of buy-to-let and second home purchases before the increase in taxes came to an end.

Looking ahead on mortgage approvals, Jones said the number could fall further as the Prudential Regulation Authority tightens underwriting standards for buy-to-let mortgages.

“And recent comments by Financial Policy Committee (FPC) member Jon Cunliffe suggest that the FPC is closely monitoring developments in the buy-to-let mortgage market and the growth of mortgage lending at high loan-to-income ratios.

“Accordingly, the FPC might act to quash any pick-up in buy-to-let lending if the recent tax changes and PRA action fail to do so.”