Insights 
VT 
In April, UK mortgage approvals numbered 60,460, falling short of the anticipated 63,000. The previous figure was 64,310, later revised to 63,600.
Net consumer credit amounted to £1.6 billion, surpassing the forecast of £1.1 billion. The previous data for consumer credit was updated from £0.9 billion to £1.1 billion.
Mortgage Debt Overview
Net borrowing of mortgage debt dropped dramatically to -£0.8 billion, a reduction of £13.7 billion from a £9.6 billion rise in March. Despite this sharp decrease, the annual growth rate for net mortgage lending experienced a minor dip from 2.7% to 2.5%.
Conversely, the annual growth rate for consumer credit increased, rising from 6.2% in March to 6.7% in April.
The figures released this week from the Bank of England tell a story that is clear at first glance but deserves closer inspection once the variations and adjustments are accounted for.
Mortgage approvals in April were not as high as expected. Expectations sat at 63,000 but approvals came in at just over 60,000. A small downward revision to March’s figure—trimmed half a thousand off—serves to highlight an ongoing softness in housing demand. Approvals typically act as a lead indicator of future housing activity, so the shortfall points to a subdued residential market heading into the summer.
More revealing however is the move in net borrowing. In April, households collectively paid down £0.8 billion in mortgage debt. That’s not just a reversal from March, when borrowing rose by nearly £10 billion, but a swing large enough to suggest more than just seasonal variation. While repayment or overpayment of mortgages isn’t unusual, the size of the turnaround places pressure on assumptions that buyers are returning. It tells us that household sentiment toward property debt may be tilting more defensive, possibly in response to rate outlooks or affordability thresholds being tested.
Impact On Rate-Sensitive Derivatives
Still, it wasn’t caution across the board. We saw consumer credit tick up, growing by £1.6 billion in April, above economists’ expectations. More people are borrowing for consumption. And this is not just a monthly blip—year-on-year, the growth rate has strengthened to 6.7%, which, even when adjusted for inflationary pressures, shows increased reliance on personal credit. The March figure was slightly lower, and supportively revised from £0.9 billion up toward £1.1 billion, confirming the broader trajectory.
So how do we square these contrasting signals?
From a trading perspective in rate-sensitive derivatives, the divergence adds texture ahead of the central bank’s next moves. The falling demand in secured lending, especially measured against rising unsecured credit growth, introduces a unique context for yield expectation adjustments. Short-end rates markets must now weigh a tapering housing appetite against more robust signs of consumer activity elsewhere. This blend does not offer a straight line to policy conclusions but gives volatility a source.
What’s more, the annual growth in consumer credit lends weight to the possibility that household balance sheets, while strained in housing, remain sufficiently robust in discretionary spending. That supports the view of stickier inflation components being sustained through demand, even as certain sectors cool off.
Traders should watch next month’s figures not for a reversal but for confirmation: either that April was a standalone corrective turn in mortgage behaviour or that a broader suppression in credit demand is beginning to anchor. Repricing risk along the curve may not wait for the full picture, so attention will have to shift onto forward indicators—bank lending surveys, default rates, and any hints of changes in loan-to-income ratios being applied by major lenders.
Bailey and the rest of the committee may be pausing for breath, but we can’t afford to. The spread between secured and unsecured lending movements needs to be monitored closely over the next two to three releases. This isn’t just noise on spreadsheets—it reflects the underlying psychology of consumer risk-taking amid still-persistent cost-of-living concerns. Where that psychology goes, rate forecasting and curve positioning will follow.
