Mortgage Borrowing at a Record High

Thomas Winfield

Thomas Winfield

£11.8bn Borrowed in March

According to the Bank of England, homeowners in the UK borrow a record £11.8bn more on mortgages than was repaid in March. This placed March 2021 as the month with the highest net borrowing level since 1933 when comparable data began.

It is suggested that the stamp duty holiday and low mortgage rates acted like a catalyst for borrowing. These factors encouraged some homeowners to move in time to beat the tax relief deadlines or to borrow further to improve their current properties.

What does this show?

The increase in borrowing could be indicative of future demands for houses as there is an increase in people wanting to own their homes. Analysts have suggested that the UK housing Market has been heating up substantially during the spring of 2021.

Rising House Prices?

Nationwide Building Society have reported that the average property price had risen by £15,916 in the year to the end of April, reaching a high of £238,831.

Beating Stamp Duty

The gross mortgage borrowing hit £35.6bn in March 2021, as people aimed to beat the end of the stamp duty holiday. The stamp duty rate was originally designed to end on the 31st of March 2021, however due to its effectiveness it has been extended until the end of June 2021.

By buying a house during the stamp duty break there is the possibility to save thousands for some buyers.

There are some fears that the celebrations surrounding the stamp duty holiday may not last as long as expected if the market calls off and people find their savings have been wiped out by the premium they paid for the property. Andre Montlake, from mortgage broker Coreco, suggests when borrowing is this extreme it does not tend to end well.


BBC News (4 May 2021). Record mortgage borrowing as owners move or improve. https://www.bbc.co.uk/news/business-56979570

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