Consumers continued to pay back credit in April while mortgage borrowing dropped slightly, data from the Bank of England has shown.
The Bank of England’s money and credit data has shown that consumers made net repayments of £400m in April, down from the average each month over the previous year (£1.7bn). As a result, the annual growth rate, while remaining weak at -5.7 per cent in April, rose from -8.8 per cent in March.
Within consumer credit, the repayment in April was concentrated in credit cards (£400m) with no additional borrowing in other forms of consumer credit.
In April, households deposited an additional £10.7bn with banks and building societies while UK businesses made significant net repayments of £4.6bn to banks, up from £400m repaid in March.
Borrowing by small and medium sized non-financial businesses in April was similar to recent months, as they drew down an extra £300m in loans.
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Meanwhile, mortgage borrowing fell back in April as individuals borrowed an additional £3.3bn secured on their homes, following a record £11.5bn in March and £5.7bn monthly average borrowed in the six months to February 2021. House purchases rose from 83,400 in March to 86,900 in April.
The Bank of England said despite weaker net lending, both gross lending and repayments remained above levels seen since the start of 2020, and the recent variability is likely to reflect the reduction in the stamp duty tax, which was initially expected to end in March, but has now been extended to the end of June.
“The mortgage approvals mayhem of March continued in April, as legions of ever more frantic buyers jumped on an apparently unstoppable housing bandwagon,” said Andrew Montlake, managing director of mortgage broker Coreco.
“In the past couple of weeks, the extreme lack of stock being reported from estate agents, together with buyers more focused on their summer holiday than the stamp duty holiday, has caused the market to pause for breath. But this may only be a brief pause.
“We are seeing the initial skirmishes in what could be a protracted mortgage rate war.”