20May

The Bank of England’s Money and Credit Report for March 2021 shows net mortgage borrowing at £11.8 billion – the highest level on record, beating the £10.4 million mark set back in 2006. Gross lending also rose to record levels, at £35.6 billion. These new records are thought to be due to the fact that the stamp duty holiday was initially expected to end in March, although this has since been extended to the end of June 2021.

Although the number of mortgage approvals during the month (82,700) was lower than the peak of 103,100 from November 2020, this area continues to show strong signs of recovery, with the latest figure still being higher than the 73,000 recorded in February 2020. Re-mortgage approvals remained relatively constant, at 34,800.

The effective rate on new mortgage approvals stands at 1.95%, an increase of 0.04% compared to February’s figure, and 0.23% higher than the all-time low recorded in August 2020. The effective rate on outstanding mortgages remains largely unchanged, at 2.08%.

Net repayments of credit in March were £0.5 billion, which is now significantly lower than the £1.9 billion average monthly net repayment over the last 12 months. March 2020 saw net repayments of as much as £4.1 billion, so in this sense repayment levels have fallen by seven-eighths over the last year.

Annual growth in the consumer credit market remains negative, at minus 8.6%, but this is an improvement on the minus 10% figure reported in February 2021.

The effective rate on new personal loans stands at 5.03%, substantially lower than the 7.03% rate seen just 13 months previously.

The effective rate on credit card borrowing is 18.01%, 0.17% lower than in February. For interest-charging overdrafts, the effective rate stands at 20.31%, down by six basis points.

Although interest rates remain at historically low levels – here the effective rate is 0.49% – an additional £16.2 billion was deposited by UK savers during March. The average amount deposited during each of the previous 12 months was £15.2 billion.