Commenting on today’s Bank of England Mortgage Lending figures, Nitesh Patel, Strategic Economist at Yorkshire Building Society, said:

The amount people collectively borrowed to buy houses dropped to £3.3bn in April, to around a third of the record £11.5bn in March, but still remains higher than pre-pandemic levels. The drop-off is likely explained by the original stamp duty exemption deadline, which was originally expected to conclude in March, but has now been extended to June.

A more accurate measure of market conditions and activity is the volume of mortgage approvals – this figure reached 86,900 in April, a slight increase on 83,400 in March. This contrast demonstrates that buyers were keen to push through higher value transactions ahead of the stamp duty deadline, to ensure they could benefit from the discount. The rush to beat the June deadline continues to fuel demand and we expect June to be another big month, but after that we expect the market to cool as the tax relief is reduced from £500,000 to £250,000. This is likely to impact demand in high value areas such as the South East. Further slowdown in activity is expected when the tax saving is removed altogether at the end of September.

However, current activity is also being driven by buyers re-evaluating their housing needs, particularly for more space in less densely populated areas, which we believe will continue to be a driver for house purchases after the June and September deadlines.

Household balance sheets are continuing to improve with excess savings – the level of savings above what households normally save – reaching £142bn since March last year. This, combined with households repaying £23bn of consumer credit in the same period, should support the housing market over the medium term as a result of greater financial confidence.

All information correct at time of publication.