In March, mortgage approvals dropped and individuals borrowed less in consumer credit.
The Bank of England’s money and credit statistics have showed that net mortgage borrowing rose while approvals for house purchases, which is an indicator of future borrowing, fell.
There were 70,700 mortgage approvals for house purchases in March, a drop from 71,000 in February, but this was above the 12-month pre-pandemic average up to February 2020 of 66,700.
Meanwhile, net mortgage borrowing increased from £4.6bn in February to £7bn in March. It remains above the pre-Covid average of £4.3bn in the year to February 2020.
Read more: Demand for consumer lending rises
“While overall property market sentiment remains very good, a dip in the level of mortgages being approved was always likely to follow such a sustained period of heightened market activity,” said Jonathan Samuels, chief executive of bridging and development lender Octane Capital.
“This has been largely due to lenders tightening their belts following a number of consecutive base rate increases and we’re now starting to see this more cautious approach to lending start to materialise within top line market statistics.
“With the cost of living also putting pressure on many households, this slow but steady decline in buyer activity is a trend we expect to see maintained throughout the remainder of the year.”
Individuals borrowed an additional £1.3bn in consumer credit in March, on net, down from £1.6bn in February, but still higher than the 12-month pre-pandemic average up to February 2020 of £1bn.
In March, consumer credit borrowing was made up of £800m on credit cards and £500m through other forms of consumer credit, such as car dealership finance and personal loans.
Read more: Consumer and business borrowing soars
“Our data at Equifax suggests that financial hardship is the elephant in the room, with many more people in the UK entering a state of financial vulnerability and the number of people falling behind on bills also rising,” said Paul Heywood, chief data and analytics officer at Equifax UK.
“These trends are set to become more pronounced in May and June as the energy price cap rise, council tax rises, and the hike in national insurance flow through to people’s wallets, so this looks more like the end of the beginning for the cost-of-living crisis than the beginning of the end.”