Mortgage lending rose at its slowest pace in April since the height of the 2012 eurozone crisis.
The slow crawl followed a significant increase in lending a month earlier, when landlords rushed to buy homes before an extra stamp duty surcharge came into effect.
The Bank of England said that net mortgage lending in April rose by £281 million, a fraction of the £7.4 billion increase seen in March and more than 13 times less than the £3.8 billion rise forecast by economists.
Such a low increase in net lending has not been recorded in Britain since August 2012 and demonstrates the impact that the extra 3 per cent stamp duty tax had on the housing market. Tens of thousands of people bought a second home or buy-to-let property in March before the surcharge on such properties came into effect on April 1.
The number of approvals for mortgages also fell in April to a two-year low, with 66,250 approved compared with monthly levels above 70,000 recorded over the first three months of the year, suggesting a notable drop in buyers since the beginning of April.
Uncertainty regarding the lead-up to the referendum on membership of the European Union is also believed to be putting a dampener on mortgage lending as people hold off buying a home until the outcome is known.
“The adverse impact of uncertainty about the outcome of the EU referendum can be seen clearly across all the latest lending data,” Samuel Tombs, economist for the research consultancy Pantheon Macroeconomics, said.
Neal Hudson, associate director of residential research at Savills, said that if the March and April results were taken as one, the net mortgage lending figure formed part of a longterm trend.
“Given the unique one-off situation we had in March, you have to look at a multilength trend,” he said. “January and February showed an average of £3.7 billion. If you average the March and April figures out you get to £3.8 billion, so across the two months it is where you would expect to be.”
On a broader outlook, mortgage lending so far this year is at its highest level since the recession, with a total of 497,301 mortgage loans made between January and April, a 17.6 per cent rise compared with the same time a year ago.
The Bank of England also revealed that buyers in April paid the lowest rates on their mortgages since 2004, as the prospect of a rise in interest rates still seems some way off.
In April the average rate paid on a new mortgage was 2.41 per cent, a fall from 2.49 per cent in March and 2.64 per cent in April. Data from the Bank of England on average mortgage interest rates goes back to 2004, when the rate was 4.55 per cent.
Meanwhile, separate data from the mortgage broker Mortgages for Business has revealed that landlords are investing in semi-commercial property to find residential property that avoids the new extra stamp duty surcharge. A property investor buying a semi-commercial property that has a shop on the ground floor with five flats above does not have to pay the extra 3 per cent stamp duty surcharge.
David Whittaker, managing director of Mortgages for Business, said that this had “piqued the interest of investors”.
He said: “Your average investor will say: ‘I understand what five flats looks like, so I understand five sixths of this.’ They avoid the 3 per cent hit on Day 1 from the stamp duty surcharge and they don’t get caught on the interest offset as it’s treated as commercial, so the interest is still fully allowable, and the yield for a commercial building is higher.”