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The number of mortgages approved by UK lenders for home purchases dropped more than anticipated in April as the end of a tax break on stamp duty cooled demand, according to data from the Bank of England.

Net residential mortgage approvals fell for the third consecutive month, declining by 3,100 to 60,500, below economists' expectations. In contrast, remortgaging activity picked up, with approvals for switching to a new lender rising by 1,600 to 35,300 in April, following a similar increase the previous month, according to the BoE's Money and Credit report.

A stamp duty holiday ended in March, with recent figures showing there was a stampede to get sales over the line before the deadline, followed by a transactions dip.

HM Revenue and Customs (HMRC) figures published last week showed an estimated 64,680 house sales took place in April – 64% lower than the 177,440 reported in March.

The study indicated the figures had been affected by changes to stamp duty rates which apply in England and Northern Ireland.

The average interest rate on newly drawn mortgages edged down slightly to 4.49% in April, but the cost of existing home loans rose slightly to 3.86% from 3.84% in March.

Richard Donnell, executive director at Zoopla, attributed April’s dip in approvals in part to the timing of Easter.

“A slowdown in demand for mortgages in April reflects the impact of a late Easter,” he said. “We expect mortgage data for May to increase in line with a pick-up in new sales being agreed, which are running at their highest level for four years.”

Read more: UK house prices rise in May as higher wages, low unemployment boost market

Donnell also pointed to easing lending standards as a contributing factor: “A key factor is also lenders relaxing affordability tests, which is delivering the average home buyer up to 20% more borrowing capacity compared to a few months ago. We expect a busy June as buyers look to secure sales before the summer holidays kick in.”

Net borrowing of mortgage debt decreased sharply by £13.7bn to -£800m in April. That followed an increase in net borrowing by £9.7bn to £13bn in March, as buyers rushed to complete transactions ahead of the new stamp duty charges that took effect in April.

Gross lending tumbled to £16.9bn in April from £39.9bn the previous month — the steepest monthly decline since June 2021. Gross repayments also fell, to £18.4bn from £23.7bn.

Nathan Emerson, chief executive of industry body Propertymark, suggested that affordability concerns were weighing on buyer sentiment.

“As the global economy continues [to] find a new balance, many people are acutely aware there could be challenges ahead regarding overall affordability when approaching the buying and selling process,” he said.

“We are starting to see more competitive mortgage deals from key lenders, but the eligibility criteria in some cases remains extremely rigid and limited. Many people may have also been temporarily deterred from potentially moving house following stamp duty threshold hikes across England and Northern Ireland from the start of April.”

The BoE data also showed a rise in consumer credit borrowing, which increased from £1.1bn in March to £1.6bn in April. The annual growth rate in consumer credit climbed by 0.5 percentage points to 6.7%. The effective interest rate on new personal loans rose to 8.69%, up 29 basis points on the month.

Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: “Borrowers with a collection of debts they are struggling to repay would be wise to plan an exit strategy from a life on credit. Whether it’s a redraft of a household budget or seeking guidance from a free debt counsellor, getting on top of liabilities is key to long-term financial resilience and being able to save for life’s major goals such as retirement.

"The sharp jump in household bills in Awful April served as a reminder that living costs can quickly spiral upwards, which is why getting to grips with personal finances is key.”