Home loan approvals sharply decline in April, with real estate agents anxiously anticipating interest rate reductions.
Loan Approval Dip: Housing Market After Stamp Duty Shutdown
The housing market has taken a breather after the stamp duty holiday cessation in April, as mortgage lending dipped significantly.
Data from the Bank of England reveals a substantial decrease in net borrowing of mortgage debt, tumbling from £13.7bn to £-0.8bn in April. This marked slowdown follows a surge of housing activity in March 2025, as buyers scrambled to secure deals before the new stamp duty thresholds began.
Net mortgage approvals for house purchases likewise dropped for the third consecutive month, hitting 60,500 in April from 63,600 in March.
Lucian Cook, Savills' head of residential research, explains, "Housing market momentum has lost a bit of steam these past few months. While the stronger-than-usual demand in March was largely due to first-time buyers meeting the stamp duty deadline, ongoing economic concerns are also impacting."
However, house prices remain resilient, rising 3.5% year-on-year in May, as reported by Nationwide, and climbing 0.5% year-on-year.
Steady as She Goes
Estate agents appear largely unfazed by this drop in mortgage borrowing. Jonathan Samuels, chief executive of specialist lender Octane Capital, comments, "Given the rush to complete before the April stamp duty deadline, it's not surprising to see mortgage approvals decline in April. Overall, we should anticipate this trend to reverse as things return to normal."
Similarly, Tomer Aboody, director of specialist lender MT Finance, notes, "Many buyers pushed their transactions through in March to save on stamp duty. The subsequent drop in April indicates the stamp duty holiday's impact."
Easing Affordability
Following the post-stamp duty reset, several positive signs are emerging: "Affordability is showing signs of improvement," says OnTheMarket's president, Jason Tebb. Reduced interest rates and eased lending criteria are helping ease the pinch on potential buyers' wallets.
Upholding this trend, strong wage growth and low unemployment continue to fuel the housing market. Tebb adds, "Further rate cuts from the Bank of England could provide a much-needed boost to the market at this time."
Monetary Tug-of-War
Despite these encouraging signals, inflation hit a high of 3.5% in April, putting pressure on the Bank of England to raise interest rates.
Jeremy Leaf, a north London estate agent and former RICS residential chairman, expresses a cautious outlook for the near future: "It's unlikely that interest rates will drop substantially moving forward as many have predicted."
Overall, the market is showing signs of adjustment following the stamp duty holiday but still faces challenges related to affordability and interest rates. Buyers must navigate this evolving landscape to secure their dream homes.
- The dip in mortgage approvals and borrowing could be a sign of a temporary lull in the property market, as buyers take a breath after the stamp duty holiday period, but experts suggest that things should return to normal soon.
- Affordability in the real-estate market is showing signs of improvement, thanks to reduced interest rates and eased lending criteria, which should help potential buyers manage their finances better, according to OnTheMarket's president, Jason Tebb.
- In the midst of these positive signs, inflation is on the rise, reaching 3.5% in April, putting pressure on the Bank of England to potentially increase interest rates.
- As the market adjusts to the post-stamp duty conditions, buyers must stay sharp and adapt to the evolving landscape in order to secure their desired properties, with both affordability and interest rates playing significant roles in the housing market business.
