Mortgage borrowing fell sharply in April, in the wake of stamp duty threshold changes.
Data from the Bank of England showed net borrowing of mortgage debt decreased by £13.7 billion to £0.8 billion in April.
It followed a flurry of activity in March and an increase in net borrowing to £13 billion, as buyers rushed to beat the April 1 deadline.
In the October Budget, Chancellor Rachel Reeves announced the Government would lower the stamp duty threshold to £125,000 from £250,000 previously. First-time buyers face the tax on properties over £300,000, down from £425,000.
The Bank of England said gross lending decreased significantly to £16.9 billion in April, from £39.9 billion in March, marking its greatest fall since June 2021.
Meanwhile, net mortgage approvals for house purchases, which is an indicator of future borrowing, fell by 3,100 to 60,500 in April. By contrast, approvals for remortgaging increased by 1,600 to 35,300 in April.
Despite this, house prices have remained surprisingly resilient, with Nationwide’s latest housing data showing a 0.5% rise in May.
Holly Tomlinson, financial planner at Quilter, said: “It’s clear the return to lower thresholds has dampened demand. For first-time buyers, the changes are particularly painful. Someone purchasing a £400,000 home now faces a £5,000 stamp duty bill, where previously there was none. That creates a higher bar to entry just as mortgage rates, while easing slightly, remain well above the ultra-low levels many had hoped might return.”
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