Mortgage lending fell from record highs in April, but the government’s decision to extend stamp duty relief is refueling the market, figures from the Bank of England show.
Banks lent £3.3 billion to homebuyers in April, down sharply from the record £11.5 billion in March. Economists had forecast a drop of £6.6 billion.
The property market has boomed since emerging from lockdown in May last year, thanks to a combination of pent-up demand, record low interest rates and the government’s stamp duty cut for homes under £500,000.
The Bank of England pointed to evidence that suggests buyers have responded positively to the extension of the relief as mortgage approvals rose to 86,921 in April. This was up from 83,402 in March but was still below November’s high of more than 103,000.
The Bank’s credit conditions report also revealed that households had paid off debt of £377 million in April as consumption dropped during lockdown. Consumer lending was 5.7 per cent below its level during the same month a year ago, down from an 8.8 per cent shortfall in March.
Karl Thompson, at the Centre for Economic and Business Research, said: “A net increase in consumer credit had been anticipated for April. However, the lifting of restrictions in May and possible further easing in June will inject life into consumer spending.”