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Lockdown led to huge fall in mortgage lending

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03/06/2020
Mortgage approvals fell 'off a cliff' in April as the lockdown brought the market to a halt
Lockdown led to huge fall in mortgage lending

The number of mortgage approvals for house purchase fell hugely in April, according to the Bank of England, to 15,800.

This was 80% below the February 2020 level and around half the number of approvals as the trough during the financial crisis.

In fact, it was the lowest since records began in 1993.

Approvals for remortgages have fallen too, but by significantly less, to 34,400, 34% lower than in February.

Lending by value

Lending has also fallen sharply to £14.4 billion, 38% lower than in February.

Repayments on mortgage lending also fell sharply, to £13.9 billion, 26% lower than in February. The Bank of England said this reflects a sharp fall in full repayments of loans, as well as the effect of payment holidays.

Andrew Montlake, managing director at mortgage broker, Coreco, said: “Unsurprisingly, mortgage approvals went off a cliff in April as lockdown put the economy on hold.

“Since the lockdown was eased in mid-May we have seen a sharp increase in enquiries, reflecting the significant pent-up demand in the market right now.

“People had a lot of time to reflect during lockdown and many have now decided that they are keen to move to different areas of the country.

“Everyone is watching the economy and trying to predict how it will fare in the months ahead as the furlough scheme is gradually unwound.”

Rates held steady

The interest rates on fixed-rate mortgages, which account for 98% of new mortgage borrowing, held steady in April according to the Bank of England, however variable rates fell slightly.

The rate paid by existing borrowers on a variable rate fell by 46 basis points, to 2.39%, the lowest rate since records began and the rate on new mortgage fell 35 basis points to 1.48%.

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