On 4 May, the Bank of England (BoE) released its monthly data on mortgage approvals for the month of March, which revealed that individuals borrowed an additional £11.8bn secured on their homes. This was the strongest net borrowing on record since the series began in April 1993, with the previous peak in October 2006 hitting £10.4bn.

The BoE Money and Credit Report made up of three parts: broad money and credit, lending to individuals and lending to businesses.

Key points:

• Net mortgage borrowing was £11.8bn in March, the strongest since the series began in April 1993. Mortgage approvals for house purchase were 82,700 in March, lower than the recent peak of 103,100 in November 2020, but higher than in February 2020 (73,000).
• Individuals continued making net repayments of consumer credit in March (£0.5bn). The effective rate on new personal loans remained low at 5.03%, compared to 7.03% in January 2020.
• Households continued depositing significant amounts, with an additional £16.2bn placed in March. Deposit interest rates remained at historically low levels.
• Private non-financial companies repaid £6.2bn of finance to capital markets in March, compared to a monthly average net issuance of £4.5bn since March 2020. Net bank borrowing by small and medium sized businesses was £0.7bn in March, whilst large businesses made net repayments of £1.4bn.

The strength in net mortgage lending reflected gross lending also reaching a new series high in March (£35.6bn). The strong borrowing was driven by the expected ending of the temporary stamp duty tax relief at the end of March, which has now been extended to the end of June.

The ‘effective’ rate – the actual interest rate paid – on newly drawn mortgages rose 4 basis points to 1.95% in March. That is above the rate in January 2020 (1.85%), and compares to a series low of 1.72% in August 2020. The rate on the outstanding stock of mortgages remained broadly unchanged at a series low of 2.08%.