UK mortgage borrowing slows in April as house purchase approvals rise

UK mortgage borrowing slowed in April, although approvals for house purchases rose, while business borrowing increased, according to figures released by the Bank of England on Tuesday.

Net borrowing of mortgage debt by individuals fell to £4.4 billion in April from £6.8 billion in March, below the previous six-month average of £5.1 billion.

Despite the slowdown in borrowing, net mortgage approvals for house purchases, an indicator of future lending activity, increased to 65,900 in April from 64,000 in March. Approvals remained above the previous six-month average of around 63,100. Remortgaging approvals were broadly unchanged.

The effective interest rate on newly drawn mortgages rose to 4.08% in April from 4.03% in March, while the rate on the outstanding stock of mortgages edged down to 3.92% from 3.93%.

Consumer credit borrowing was unchanged at £1.9 billion in April, matching the previous six-month average. Within this, credit card borrowing increased to £0.8 billion from £0.7 billion, while borrowing through other forms of consumer credit, including personal loans and car finance, fell to £1.0 billion from £1.2 billion.

The annual growth rate of consumer credit eased to 8.8% from 9.0% in March.

For businesses, private non-financial corporations raised £5.5 billion of net finance in April, up from £3.7 billion in March. This was driven mainly by £4.4 billion of net borrowing through bank loans and building societies, alongside £1.0 billion of net commercial paper issuance.

UK non-financial businesses borrowed £5.2 billion of loans from banks and building societies in April, compared with £5.9 billion in March. Large businesses accounted for £4.2 billion of borrowing, while small and medium-sized enterprises borrowed £1.0 billion.

The effective interest rate on new loans to private non-financial corporations remained unchanged at 5.52%, while the rate on new SME loans increased to 6.16% from 6.11%.

Meanwhile, households deposited £5.8 billion with banks and building societies in April, slightly above £5.6 billion in March. Deposits were driven by £12.0 billion of inflows into individual savings accounts.

The Bank of England said the net flow of sterling money, known as M4ex, fell to £9.2 billion in April from £23.2 billion in March, while sterling net lending to households and companies declined to £11.6 billion from £20.8 billion.

The annual growth rate of M4ex increased to 4.6% from 4.5%, while annual M4Lex growth rose to 6.4% from 6.0%.

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