Buyers owed £7billion in March, up from £4.6billion in February, the Bank of England reports. While mortgage approval numbers were broadly unchanged month-on-month at 70,700, they were above the prepandemic average. But experts warned the market could slow down as people are forced to tighten their belts more.
The Bank of England’s monetary policy committee is expected to push up interest rates when it meets today.
Policymakers are predicted to increase rates from 0.75 per cent to 1 per cent – a level not seen since early 2009 – and ramp up its forecasts for already-rocketing inflation, as the Ukraine war worsens a crippling cost-of-living crisis.
Andrew Montlake, of the UK-wide mortgage broker Coreco, said: “In the months ahead, it’s likely that people’s borrowing power will wane as lenders take into account the extra cost of living.
“A lot will depend on the jobs market and how it holds up during 2022.”
Ross Boyd, of mortgage comparison platform Dashly.com, said: “Rate rises and soaring inflation mean affordability is set to be the defining narrative of 2022. Lenders are now starting to look at people’s finances in ever more forensic detail.
“This is particularly the case given that the annual growth rate for all consumer credit rose to 5.2 per cent in March, the highest rate since February 2020.”
Consumer credit, which includes credit cards, overdrafts, finance and loans, rose at the fastest pace since before the coronavirus lockdowns began.
Approvals for remortgages, which only include home loans taken out with a different lender, rose slightly to 48,800 in March.