LONDON (Reuters) -British homebuyers increased their mortgage borrowing by the most in nearly four years in March as they rushed to beat the end of a tax break but Bank of England data published on Thursday also showed signs of caution among consumers.
Net mortgage borrowing rose by 12.963 billion pounds ($17.27 billion), the biggest jump since June 2021 during the COVID-19 pandemic which prompted a surge in the property market.
On April 1, Britain’s government ended a temporary tax discount scheme for first-time homebuyers. A tax surcharge for second homes also rose.
The housing market has shown signs of cooling since the tax break ended. Data from one of Britain’s mortgage lenders, Nationwide, on Wednesday showed house prices fell by the most in nearly 18 months in April from March.
The BoE figures showed mortgage approvals for house purchases – a leading indicator for lending – cooled slightly to 64,309 mortgages, down from 65,093 in February and just below economists expectations for 64,800 approvals.
Britain’s economy is expected to grow more slowly than previously expected this year in part due to trade tensions triggered by U.S. President Donald Trump’s import tariffs.
Figures published earlier on Thursday showed manufacturers’ exports shrank at the sharpest pace since May 2020.
The BoE’s data showed net unsecured lending to consumers rose by a weaker-than-expected 0.9 billion pounds after a 1.3 billion-pound increase in February. The Reuters poll had pointed to a reading of 1.2 billion pounds in March.
“March’s money and lending data suggest households were starting to spend more cautiously even before the full hit to consumer confidence from the heightened uncertainty caused by the new US tariffs regime is felt,” Ashley Webb, UK economist at Capital Economics, said.
The BoE is expected to cut interest rates by a quarter-point to 4.25% next week.
“Falling mortgage rates will fuel a rise in activity as the year progresses, providing volatility in global trade policy de-escalates and the UK’s economic outlook remains on track,” said Simon Gammon, managing partner at Knight Frank Finance.
($1 = 0.7504 pounds)
(Reporting by Suban Abdulla and David Milliken, Editing by William Schomberg and Ed Osmond)
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