Net mortgage borrowing hit £11.8bn in March, new data published by the Bank of England (BoE) has revealed.

This figure is the strongest since the BoE’s series began in April 1993, with the previous peak standing at £10.4bn in October 2006.

The BoE’s latest Money and Credit statistics also showed that mortgage approvals for house purchase reached 82,700 in March, which was lower than the recent peak of 103,100 in November 2020, but higher than in February 2020 (73,000), before the UK went into its first lockdown.

The strength in net lending reflected gross lending also reaching a new series high in March (£35.6bn). The Bank suggested these strong borrowing figures were driven by the expected ending of the temporary stamp duty tax relief at the end of March, which has now been extended to the end of June.

Commenting on the data, Just Mortgages and Spicerhaart national operations director, John Phillips, said: “This year has been unprecedented in terms of the volume of mortgages, and March was possibly the peak in an impressive climb. Partially driven by a desire to beat the initial stamp duty deadline, we’ve had a continuous stream of clients looking for mortgages in the first quarter of 2021.

“With the record interest in moving, brokers and lenders deserve a great deal of credit for the huge number of mortgages that have been approved recently.

“With other companies in a variety of industries making similar decisions, these changing working practices should fuel the desire to move, so the market should remain busy for the next few months at least.”

Bluestone Mortgages managing director, Steve Seal, added: “It is reassuring to see that the mortgage market continued to show strong signs of recovery during March. Policies such as the stamp duty holiday have further rallied buyer appetite and have no doubt contributed to today’s statistics. 
 
“Over the long-term, however, the challenge will be to support the thousands of borrowers who emerge from the pandemic in a more precarious financial situation than they were before. Borrowers in this position could risk being locked out of high street lending altogether.”

Figures also indicated that individuals have made significant net repayments of consumer credit since March last year.

The BoE stated that a further net repayment of £0.5bn in March this year was, however, a little smaller than seen on average each month over the past year (£1.9bn). It was also a smaller net repayment than in March 2020 (£4.1bn), so the annual growth rate – while remaining weak at -8.6% in March – rose from its series low of -10% in February.

Within consumer credit, the Bank stated that weakness on the month reflected net repayments on credit cards (£0.4bn) and other forms of consumer credit (£0.2bn). The annual growth rates of both components have risen from series lows, but remained weak at -18.5% and -4.1%, respectively.

AJ Bell financial analyst, Laith Khalaf, commented: “Consumers continue to save large chunks of money into bank accounts paying little or no interest. These latest figures show the state of play in March, when full lockdown was still largely upon us.

“When the BoE next updates us on April’s consumer activity, we’ll be able to see if the reopening of the economy is beginning to put the pandemic savings habit into reverse. Consumers paid down less credit card debt in March, which tentatively suggests that might be beginning to happen.

“Nonetheless, a significant cash war chest has been built up over the last 12 months, and consumers need to decide what to do with it. With instant access accounts now paying just 0.11% on average, leaving it where it is doesn’t look like a great long-term plan.”

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