UK households saved more and borrowed less for house purchases in March, according to data from the Bank of England.
Deposits with banks and building societies, as well as cash stored in National Savings & Investment accounts, increased £6.7 billion during the month, up from just over £5 billion in February.
Net new mortgage approvals for house purchase fell to roughly 64,300 in March from 65,100 in February, slightly below the consensus forecast of 64,500. February’s figure was revised down from 65,500. Approvals for remortgaging increased by 1,000 to 33,400.
Total net borrowing of mortgage debt increased £9.7 billion to £13.0 billion in March, following a decrease in net borrowing of £1 billion to £3.3 billion in February.
Net credit card borrowing decreased to £0.2 billion, the lowest since April last year, while net borrowing through other forms of consumer credit remained unchanged at £0.6 billion.
"Households in March added to their savings, cut back on credit accumulation, and had fractionally fewer mortgages approved for house purchases," was the summary from economist Elliott Jordan-Doak at Pantheon Macroeconomics.
"We think this reflects consumers beginning to show signs of modest caution in response to the rising uncertainty in March as Mr Trump’s 'Liberation Day' deadline approached."
He said consumers are "far from being in panic mode", with the effect of the stamp duty threshold relief affecting the mortgage numbers, and as it takes around two months on average to complete a house purchase, another drop in mortgage approvals in April is likely.
"We think the impact of higher stamp duty costs will prove temporary however," Jordan-Doak added. "Household surveys indicate that mortgage affordability and raising a deposit are far more constraining factors on purchasing a home than stamp duty costs, so the policy change should only impact buyers at the margin."
Taking a step back, he said the bigger picture is "one where Mr Trump’s tariff salvo has the potential to upend the gradual path of falling saving, stronger borrowing, and robust housing demand shown by households.
"That said, the GfK’s consumers’ confidence index fell just a few points in April – even as uncertainty soared – and households have rebuilt their rainy day savings, so the consumer is in a good place heading into the trade war.
"But we think bigger tests lay ahead for the consumer from higher prices and the prospect of tax rises in the upcoming Budget. Uncertainty is already hitting business investment too, so we expect the money and credit data to remain weak over the coming months."