The Bank of England Money and Credit data showed that gross mortgage repayments also rose in February, up from £16.3bn to £19.8bn month-on-month.
During the month, the net borrowing of mortgage debt fell by £900m to £3.3bn, following an £800m rise in net borrowing in January.
The annual growth rate for net mortgage lending was 1.9%.
Jeremy Leaf, North London estate agent and a former Royal Institution of Chartered Surveyors (RICS) residential chair, said the net borrowing figures were “interesting” as the gains made in January were reversed in February, “graphically illustrating the loss of buyers’ additional stamp duty concession”.
He said: “However, on the ground, we are not seeing any significant correction but a determination of many to press ahead with moves, many of which were previously brought forward. Fewer sales and more protracted negotiations are resulting, but plenty of stock means prices are softening a little.”
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Flat mortgage approvals
In February, the number of mortgages approved for house purchases fell by 600 to 65,500, following a decrease of 400 in January.
The rise in remortgage activity reversed with an 800 decline in approvals to 32,000 in February, compared to an increase of 2,100 the month before.
There was a 2% rise on the average interest rate on newly drawn mortgages, coming to 4.53% in February.
The average rate on outstanding mortgages rose from 3.81% to 3.87% month-on-month.
A steady mortgage market
Industry figures said the small change in mortgage approvals indicated the market was stable.
Nathan Emerson, CEO of Propertymark, said: “With the wider global economy seeing upheaval, many people remain cautious about how this might affect aspects such as the rate of inflation and base rates domestically. Although overall we are seeing an encouraging level of growth year-on-year within the housing market, it is vital consumers feel confident enough to approach a potential house move when looking at their affordability.
“We have seen a strong start to the year overall, and as we head further towards the summer months, we remain optimistic to see further market momentum. It does, however, remain imperative that the rate of inflation remains closely aligned with the initially set target of 2% before the Bank of England will likely consider any new base rate cuts.”
Mark Harris, chief executive of SPF Private Clients, said: “With mortgage approvals falling only slightly in February, it’s steady as she goes for the market.
“The effective interest rate paid on new mortgages rose to 4.53% although since then, we have seen lenders trimming their mortgage rates. Further reductions from the Bank of England will help improve confidence and affordability, particularly once the stamp duty concession has ended.
“Remortgaging numbers dipped, perhaps suggesting that borrowers are sticking with their existing mortgage provider rather than shopping around and going through the hassle of applying to another lender.”
Jason Tebb, president of OnTheMarket, said the slight dip in house purchase approvals was a sign of market stability, adding that “buyer confidence continues to be steady”.
He said further cuts to the base rate would be a “welcome shot in the arm for the market, particularly with the stamp duty concession ending today”.
