According to the Bank of England’s Money and Credit report, this was the greatest fall in gross mortgage lending since June 2021.
Gross repayments also declined from £23.7bn to £18.4bn month-on-month.
The report also found a decrease in net borrowing of mortgage debt, which fell from £13.7bn the previous month to negative £800m in April. This followed a £9.7bn increase in net mortgage lending seen in March, totalling £13bn.
Further, the annual growth rate for net mortgage lending fell from 2.7% to 2.5% on a monthly basis.
Tomer Aboody, director of MT Finance, said: “With net borrowing dropping sharply in April after the stamp duty holiday ended, this is further evidence of how the housing market reacts to stamp duty changes.
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“Many buyers pushed transactions through in March in order to save themselves money. With fewer approvals for house purchases for several consecutive months, we are seeing the effects of constantly hitting would-be buyers.”
Richard Donnell, executive director at Zoopla, said: “A slowdown in demand for mortgages in April reflects the impact of a late Easter. We expect mortgage data for May to increase in line with a pick-up in new sales being agreed, which are running at their highest level for four years.
“A key factor is also lenders relaxing affordability tests, which is delivering the average homebuyer up to 20% more borrowing capacity compared to a few months ago. We expect a busy June as buyers look to secure sales before the summer holidays kick in.”
House purchase approvals continue to decline
The data from the Bank of England showed mortgage approvals for house purchases fell for the fourth month in a row, declining by 3,100 to 60,500 in April.
In contrast, there was a 1,600 increase in remortgage approvals, totalling 35,300 in April. This was higher than the 1,000 increase recorded in March.
The average interest rate on newly drawn mortgages fell to 4.49% in April, while the interest rate on outstanding mortgages rose from 3.84% to 3.86%.
Just a small drop in approvals
It was suggested that the small decline in mortgage approvals did not point to a collapse in activity.
Jason Tebb, president of OnTheMarket, said: “While approvals for house purchases, an indicator of future borrowing, dipped again in April for the fourth consecutive month, market stability and buyer confidence continue to be steady.
“With the rate on newly drawn mortgages falling again in April, while the rate on outstanding mortgage stock rose slightly, overall, there are signs that affordability is easing a little. Four rate reductions since August have helped, along with lenders easing criteria, but mortgage rates are still higher than many have grown used to in recent years.
“Further rate reductions from the Bank of England would provide more impetus for the market, particularly now that the stamp duty concession has ended.”
This article was first published on YourMoney.com‘s sister site, Mortgage Solutions. Read: Gross mortgage lending plummets by more than half to £16.9bn in April – BoE
