However, approvals for remortgaging increased by 1,000 to 33,400 in March.
The Bank said that net borrowing of mortgage debt by individuals increased sharply by £9.7 billion to £13.0 billion in March, following a decrease in net borrowing of £1.0 billion to £3.3 billion in February.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: “UK mortgage approvals – an indicator of future borrowing – fell in March for the third consecutive month despite the surge in buyers racing to beat the deadline to take advantage of the temporary increase to stamp duty thresholds. The data reflects the market returning to a ‘new normal’ as 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.
“Higher stamp duty costs are likely to be a challenge for buyers going forward, particularly for first-time purchasers who must not only raise a deposit but also source extra funds to cover a bigger tax bill. The continuing economic turmoil in the wake of Liberation Day on April 2, when President Trump unleashed the full force of his tariff war, may also be concerning for anyone considering buying their first home or upsizing to a larger property. Add in higher living costs following the raft of bill hikes rolled out in ‘Awful April’ – from council tax to energy, water and more – and it’s natural for buyers to feel anxious about their next steps.”
Rosie Hooper, chartered financial planner at Quilter Cheviot, added: “Given March was the final month of the lower stamp duty rates, it comes as little surprise that net borrowing of mortgage debt climbed dramatically by £9.7 billion to £13.0 billion in March. This follows what had been a decrease of £1.0 billion to £3.3 billion in February. Gross lending also increased markedly to £39.9 billion in March, rising from £24.9 billion in February.
Your Mortgage Awards 2024/25: winners revealed
Sponsored by Your Mortgage Awards
“While the stamp duty changes certainly spurred on prospective first time buyers and home movers, net mortgage approvals for house purchases, which is indicative of future borrowing, fell for the third consecutive month. This figure dropped by 800 to 64,300 in March, and given those looking to purchase a new home will have to contend with a significantly higher tax bill going forward, we can expect this decline to continue at pace for some time yet.
“Similarly, the spike in borrowing is expected to be anomalous, and we are likely to see an equally sharp slowdown in the coming months. Prospective buyers who were unable to get a sale across the line before the end of March may well either reconsider their plans to move entirely or will need to continue building their savings pot to cover the higher tax bill.”
