UK mortgages collapse in April amid stamp duty uncertainty
UK mortgages slumped in April as the government’s decision to extend tax relief on property sales came too late to sway buyers this month, but property market activity appears poised to rebound , according to Bank of England data.
UK lenders’ net mortgage loans fell in April to 3.3bn pounds ($ 4.7bn) from a record 11.5bn pounds the previous month, a drop even sharper than the drop to 6 , 6 billion pounds predicted by economists in a Reuters poll.
“The recent variability is likely to reflect the reduction in the stamp duty, which was originally scheduled to end in March, but has now been extended until the end of June,” the BoE said.
Sunak announced that he would extend the tax break in his March 3 budget. But many buyers were already rushing through deals to complete them before the earlier deadline.
The reduction in the property tax on stamp duties began in July last year to stimulate real estate transactions after a crisis at the start of the pandemic.
House prices have exploded since then, despite economic damage to other sectors caused by the COVID pandemic, with prices in May up 10.9% from a year ago according to lender Nationwide, the biggest jump since 2014. read more
Another key driver of the price hike has been the increased demand for spacious housing outside of city centers from people who can now work from home.
Mortgage approvals – which adjusted faster than loans to the tax change – rose to 86,921 in April from 83,402 in March, although they were lower than the high of over 103,000 in November.
Households continued to repay personal debt, largely reflecting reduced spending opportunities during the lockdown, which was still largely in place in April.
Net repayments totaled £ 377m, well below economists’ average forecast for £ 500m net of new borrowing. April net consumer loans were 5.7% below their level a year ago, compared to a deficit of 8.8% in March.
($ 1 = 0.7077 pounds)
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