Martin Beck, senior economic advisor to the EY ITEM Club, comments, “Total household borrowing rose by £2.9 billion in April, down from the £3.3 billion recorded in March and broadly in line with the average of £2.8 billion seen over the previous six months. Annual growth remained at a modest 2.4% for the fifth successive month, below estimated growth in household incomes and pointing to a continued drop in household debt-to-income ratios.
“Net lending for mortgages in April also saw a drop on March’s level. However, April did see a surprisingly strong rise in mortgage approvals, up from an upwardly-revised 61,945 in March to 68,076. This was the largest monthly increase since February 2009 and took approvals to 8% above their level a year earlier.
“So warnings of a pre-election softening in housing market activity look to have been wide of the mark. Mortgage demand may well have been supported by further drops in borrowing costs. The effective interest rate on a new mortgage fell to a new record low of 2.64% in April, almost 50 basis points below the rate available only six months earlier.