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Mortgage approvals have fallen to a six-month low, as the housing market shows signs of slowing down ahead of impending changes to stamp duty in April.

Data from the Bank of England revealed that the number of mortgage approvals for house purchases dropped by 600 to 65,500 in February, following a decline of 400 in January. This marks the lowest figure since August.

Meanwhile, approvals for remortgaging, which capture instances where homeowners switch lenders, also decreased by 800 to 32,000 in February after a rise of 2,100 in January.

From Tuesday, stamp duty will become more expensive for some homebuyers, with "nil rate" bands being reduced. Stamp duty applies in England and Northern Ireland.

Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: "Anyone starting their property purchase journey now has left it too late to secure the lower property tax rate as the stamp duty relief ends today.

"Even those that had an offer accepted several months ago may miss out if the conveyancing logjam from the sharp rise in demand prevented their deal getting across the line in time to secure the lower stamp duty rate."

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Matt Swannell, chief economic adviser to the consultancy EY ITEM Club, said the decline in mortgage approvals was part of a broader trend. "The slowing of mortgage approvals reflects an unwinding of a boost late last year, when homebuyers sought to purchase homes ahead of an increase in property transaction taxes in April," he said. "In the near term, this will continue to drag on mortgage activity."

Despite the fall in approvals, the Bank of England's latest Money and Credit report showed that net mortgage lending — which reflects completed transactions — grew at the fastest pace since the three months ending November 2022, when mortgage lending stalled following the disruption caused by former prime minister Liz Truss's proposed budget plans.

The data also revealed that net borrowing of mortgage debt by individuals fell by £900m to £3.3bn in February, following an increase of £800m in January. The annual growth rate for net mortgage lending remained stable at 1.9% in February.

Gross lending saw an uptick, rising to £24.3bn in February, up from £21.7bn in January, and the highest level since November 2022, when it reached £24.9bn. Gross repayments also rose to £19.8bn from £16.3bn.

Lucian Cook, head of residential research at property firm Savills, said: "A minor slip in mortgage approvals in February adds weight to the narrative that the housing market recovery has lost some momentum in the early part of the year, given a lack of economic impetus and the stop-start nature of interest rate cuts."

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Regarding non-mortgage borrowing, net consumer credit borrowing stood at £1.4bn in February, down from £1.7bn in January. This decrease was largely driven by a slowdown in net borrowing through credit cards, with net borrowing through other forms of consumer credit — such as car dealership finance and personal loans — remaining steady.

Household deposits with banks and building societies rose by £4.3bn in February, following net deposits of £8.7bn in January. The increase was mainly attributed to households depositing an additional £3.6bn into Isas.

On the business side, borrowing by large businesses saw an annual growth rate of 4.7% in February, up from 4% in January, marking the highest growth since January 2023. In contrast, borrowing by small and medium-sized enterprises (SMEs) fell by 1.5% annually.