Mortgage lending in the UK continued to shrink last month, according to new Bank of England figures, as banks and other lenders nudge up rates following four rises in the base rate since December.
Data from the BoE this morning revealing that the “effective” interest rate – the actual interest rate paid – on newly drawn mortgages increased to 1.82% in April from 1.73% the month before and 1.58% at the end of January.
The BoE has also released mortgage lending numbers, showing net mortgage borrowing fell to £4.1bn in April from £6.4bn in March.
The number of mortgage approvals for house moves in the coming few months fell to 66,000 in April – below the pre-pandemic average – from 69,500 in March.
These was not only again below the pre-pandemic 12-month average but also lower than the average for 2015-to-2019.
British consumers borrowed another £1.4bn, including £700mln on credit cards, which is the third consecutive month above the pre-pandemic average, while credit card debt was up 11.6% in a year – the highest since November 2005.
Households' total liquid assets held in bank deposits, as well as cash stored in National Savings and investment accounts, rose by £6.3bn.
Timelier data suggest mortgage approvals "will continue to decline over the coming months," said economist Samuel Tombs at Pantheon Macroeconomics.
Google Trends data, for instance, show that searches for Rightmove, Zoopla and On The Market in the week to May 22, were just 3.8% above their 2017-to-19 average level for the time of the year, well below the 2021 average of 18.1%.
Zoopla also revealed this week that one in 20 listed properties reduced their asking price by 5% or more in April to mid-May, more than in previous months.
"The combination of falling real disposable incomes, surging mortgage rates and low consumer confidence suggests mortgage approvals will remain below their 2015-to-19 average in the second half of this year," said Tombs.
Martin Beck, of the EY Item Club, said: “Until recently, the housing market had remained relatively resilient to the squeeze on household finances and higher interest rates. But these forces are now starting to weigh on demand".
Adrian Lowery, an analyst at Bestinvest, says that the monthly decline in the total amount borrowed is a startling 56%, although he noted that this data set has been very volatile recently.
All in all, he said there were ever more "signs that the market is softening, and price growth is set to slow"
“This data could be taken as the latest sign that nervousness over inflation and household finances is starting to drag on what has been an overheated sellers’ property market," Lowery said.
On the effective interest rate, with further hikes to the base rate in coming months as policymakers seek to rein in soaring inflation, Lowery said fears of further mortgage rate rises have been "pushing more and more homebuyers and remortgagers to look for longer-term fixed-rate mortgages", with five-year deals hugely popular and demand for 10-year deals soaring.
He noted that the comparison website MoneySupermarket revealed that searches for ten-year fixed rate mortgages have leapt from 2.9% of all mortgage searches in May last year to 14.2% currently. 10am: Fuel prices in focus
Downing Street is facing calls for a second cut in fuel duty this year as forecourt prices hit record highs, with the cost of filling a family car with diesel topping £100 for the first time.
The average price of diesel in the UK rose to a record 182.59p a litre on Sunday and petrol prices increased to a record 172.73p a litre, according to the AA.
Chancellor Rishi Sunak cut fuel duty by 5p a litre in March, but campaigners have accused retailers of increasing their margins rather than passing the reduction on to drivers.
Having been higher earlier in morning trading, shares in NatWest Group PLC (LSE:NWG), Lloyds Banking Group PLC (LSE:LLOY) and Barclays PLC (LSE:BARC) moved into the red after the data.
In the year to date, Barclays is down 13.7%, Lloyds 10.2% and Natwest 3.2%, while HSBC is up 12.2%.