Mortgage borrowing in the UK saw a significant increase in March 2026, with net mortgage borrowing rising to £6.2 billion, up 19% from £5.2 billion in February. This surge surpasses the six-month average of £4.9 billion, indicating a robust demand for mortgages despite fluctuating economic conditions.
Key Statistics from March 2026
According to the latest money and credit statistics published by the Bank of England, secured gross lending also saw an uptick, reaching £28.7 billion in March, compared to £24 billion in February. This figure exceeds the six-month average of £23.9 billion, reflecting a healthy lending environment. However, the annual growth rate for net mortgage lending has slightly decreased to 3% in March, down from 3.4% in February.
Increased Mortgage Approvals
Mortgage approvals, which serve as an indicator of future borrowing, also rose in March. Net mortgage approvals for house purchases increased to 63,500, up from 62,700 in February, and above the six-month average of approximately 63,200. Additionally, approvals for remortgaging with different lenders climbed to 51,300 in March, a notable rise from 41,200 in February. This trend suggests that homeowners are actively seeking to secure better mortgage deals as interest rates fluctuate.
Interest Rates on Mortgages
The effective interest rate paid on newly drawn mortgages decreased to 4.03% in March, down from 4.10% in February. Furthermore, the rate on the outstanding stock of mortgages also fell to 3.93%, down from 3.95% in the previous month. Mark Harris, chief executive of mortgage broker SPF Private Clients, commented on the resilience of the housing market, attributing the increase in approvals to a recovering economic outlook following the recent Budget announcement.
This reduction in interest rates may encourage more potential homeowners to enter the market or for existing homeowners to remortgage, particularly as the UK base rate stands at 3.75% as of April 2026.
For example, a homeowner with a £200,000 mortgage could see significant savings by remortgaging at the current effective rate of 4.03% compared to previous rates, potentially lowering their monthly payments and overall interest costs.
Conclusion
The increase in mortgage borrowing and approvals, coupled with declining interest rates, indicates a positive shift in the UK housing market. Homebuyers and homeowners alike may benefit from these developments as they navigate their mortgage options.
FAQs
- What is the current effective interest rate for new mortgages? The effective interest rate for newly drawn mortgages decreased to 4.03% in March 2026.
- How much did mortgage borrowing increase in March 2026? Net mortgage borrowing rose to £6.2 billion in March, a 19% increase from February.