Published: 30/09/2020Mortgage approvals soared to a near 13-year high in August as the scramble to buy homes continued.
The number of mortgages given the green light hit their highest level since October 2007 as a result of increased demand following lockdown and the government’s stamp duty holiday.
A total of 84,700 mortgages were approved in August, a 28% increase on the previous month’s total, according to the Bank of England.
David Ross, managing director, Hometrack, said: “Today’s report confirms the bounce back in mortgage approvals for house purchases that Hometrack identified during August. We have seen continued growth in applications during September showing that demand remains high at approximately 30% up on a year ago.
“At the same time, we are seeing signs of softening of demand from first-time buyers with 20% fewer applications for mortgages requiring less than a 15% deposit in September when compared to August.
"This is potentially affected by reducing availability of low deposit mortgages but has been offset by strong demand amongst home movers and higher equity applicants."
Why is this happening?
A number of factors have combined to produce August’s strong figure for mortgage approvals for house purchase.
The demand that built up during the weeks that the housing market was closed is continuing to work through the system.
At the same time, lockdown itself has prompted people who were previously happy to stay put to consider moving, after finding their current home did not meet their needs during lockdown.
The government’s stamp duty holiday, under which stamp duty is waived on homes costing up to £500,000 until 21 March 2021, has provided a further boost to the market.
Prior to the coronavirus pandemic, property transaction levels had been held back by a shortage of homes for sale.
It is significant that mortgage approvals for house purchases have reached their highest level since the global financial crisis, as this suggests despite concerns about economic uncertainty and rising unemployment, banks and building societies are still happy to lend on homes.