Mortgage lending approvals fell in March.

March saw an unexpected fall in mortgage lending.  Unsecured credit grew at its slowest pace in more than five years.

Figures released by the Bank of England show that uncertainty over the UK’s exit from the EU has made consumers cautious.

Mortgage lending drop – A sign of housing slowdown?

According to their figures, the BoE says lenders approved 62,341 home loans. A drop of 3,000 in March. The fewest since the end of 2017 and down almost 5% from February. Remortgages saw a slight increase from 49,289 to 49,713.

New gross lending dipped to £21.6bn in the month, down from £22.6bn in February, and also down from £22bn in March 2018.

Consumer credit grew just £549 million, less than half the pace of the previous two months and the smallest increase since November 2013.

The BOE also said credit was weak because of a fall in new lending for car finance and more subdued borrowing on credit cards. The annual growth rate slowed to 6.4 percent, the least since October 2014 and down from rates above 10 percent in 2017.

Nationwide Building Society report.

The Nationwide Building Society report also showed the housing market remained subdued in April. Prices rose by less than 1% on an annual basis for the fifth consecutive month.

Mortgage approvals remain well below the 70,000 applications a month posted in the year leading up to the 2016 Brexit referendum.

Lending to non-financial business fell by £683 million in March. Non-resident investors bought a net 9.4 billion pounds of U.K. government bonds following sales of 8.3 billion pounds in February.

Remortgaging pushes market

Jonathan Harris, director of Anderson Harris, argued that Brexit uncertainty was clearly still having an impact on people’s property decisions. He said:

“That said, mortgage lending picked up in March compared with February as some people got on with buying and selling their homes regardless. Much of the activity was down to remortgaging as borrowers locked into some of the competitive fixes currently available to protect themselves from potential future uncertainty.”

Richard Pike, director of sales and marketing at Phoebus Software, said:

The Bank of England figures were a “mixed picture”, but suggested that there will come a time when Brexit-related caution is thrown to the wind and people push on regardless.

“Then we’ll see how well the housing market copes with demand. That being said, it would be a very brave person that would put their hat in the ring with concrete predictions for the coming months,” he added.

Nick Chadbourne, chief executive of LMS, suggested that April will likely be a strong month for completions, though new enquiries may tail-off.

“However, as we move into summer, both are likely to build again, delivering a surge in demand for mortgage brokers, lenders, and conveyancers,” he continued.

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