The number of mortgage approvals made to home buyers fell back in February to its lowest point since last summer, according to Bank of England figures.
Some 65,500 mortgage approvals for house purchases were recorded in February, which was around 600 lower than in January, the Bank’s Money and Credit report said.
It was the lowest monthly figure recorded since August 2024.
From Tuesday, stamp duty will become more costly for some home buyers, with “nil rate” bands shrinking. Stamp duty applies in England and Northern Ireland.
Lucian Cook, head of residential research at property firm Savills said: “A minor slip in mortgage approvals in February adds weight to the narrative that the housing market recovery has lost some momentum in the early part of the year, given a lack of economic impetus and the stop-start nature of interest rate cuts.”
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, an online investment platform said: “Anyone starting their property purchase journey now has left it too late to secure the lower property tax rate as the stamp duty relief ends today. Even those that had an offer accepted several months ago may miss out if the conveyancing logjam from the sharp rise in demand prevented their deal getting across the line in time to secure the lower stamp duty rate.”
Jason Tebb, president of OnTheMarket, said recent Bank of England base rate reductions are “helping but mortgage rates are still higher than many have grown used to in recent years”.
He added: “Further reductions from the Bank of England would provide a welcome shot in the arm for the market, particularly with the stamp duty concession ending today.”
Karim Haji, global and UK head of financial services at KPMG, said: “High deposit requirements may also be impacting first-time buyers’ appetites.
“Lenders must offer the right level of support to help those struggling financially both now and in the challenging months ahead.”
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Approvals for remortgaging (which only capture remortgaging with a different lender) decreased by 800 to 32,000 in February, according to the Bank’s figures.
Simon Gammon, managing partner, Knight Frank Finance, said: “The market is currently dominated by people who need to move, often those who put off big decisions during the volatility of last year. As a result, affluent suburban areas of cities like London are increasingly competitive. We’ve seen a sharp increase in homeowners taking bridging finance to purchase homes before they have found their own buyer, for example.
“There is still a huge amount of competition among lenders. Where they can’t move on rates, we’ve seeing lots of changes to lending criteria in an attempt to broaden their scope of borrowing and build market share.”
Looking at non-mortgage borrowing by households, net consumer credit borrowing stood at £1.4 billion in February, down from £1.7 billion the previous month. The decrease was driven by a slowing in net borrowing using credit cards, with net borrowing through other forms of consumer credit (such as car dealership finance and personal loans) remaining steady.
Households’ deposits with banks and building societies increased by £4.3 billion in February, following net deposits of £8.7 billion in January.
The uptick was mostly driven by households depositing an additional £3.6 billion into Isas, the report said.
Looking at business borrowing, the annual growth rate of borrowing by big businesses increased to 4.7% in February, from 4.0% in January, and was the highest rate since January 2023 (5.5%).
Borrowing by SMEs (small and medium-sized enterprises) fell by 1.5% annually.
