The number of mortgage purchase approvals “continued increasing sharply in August”, rising to the highest figure seen since October 2007, according to the latest Money and Credit figures from the Bank of England.
Approvals for purchases rose to 84,700 from 66,300 in July, however the Bank says this “only partially offsets weakness seen between March and June.”
In total, there have been 418,000 approvals in 2020, compared with 524,000 in the same period in 2019.
Approvals for remortgaging with a different lender are little changed compared to July, at 33,400 and remain 36% lower than in February 2020.
Net mortgage borrowing was £3.1bn in August, following borrowing of £2.9bn in July. Mortgage borrowing troughed at £0.5bn in April, and is still a little below the average of £4.2bn in the six months to February 2020. The increase on the month reflected slightly higher gross borrowing of £18.8bn, although it is still below the pre-Covid February level of £23.7bn.
Managing Director of Enness Global Mortgages, Hugh Wade-Jones said, “Despite a reduction in the availability of high loan-to-value products, we’re yet to see the level of mortgages approvals tail off due to overwhelming levels of buyer demand in recent months. In fact, approvals are at their highest levels in nearly 13 years. Unlucky for some, but certainly not for the nation’s current home buyers and sellers.
“Homebuyers at all price tiers are digging deep to come up with a larger deposit to secure a stamp duty saving, and although many lenders may be treading with caution, they continue to make hay while the sun shines.
“This trend will continue to be driven forward by the high-end market who have far fewer obstacles in their way when obtaining a mortgage but still recognise that investing now makes good financial sense.”
Director of Benham and Reeves, Marc von Grundherr said, “We’ve seen little to no let-up in the volume of homebuyers hitting the market despite a tightening of finance options available.
“Where they may have been traditionally buying with a 15% to 20% deposit, they’re now stretching to as much as 30%. They are doing so to not only to take advantage of the favourable rates currently on offer but to secure a stamp duty saving in the process.
“Since the stamp duty holiday was announced, the number of mortgage approvals seen on a monthly basis has more than doubled, and so the boost it has given the market can not be underestimated.”
Founder and CEO of Yes Homebuyers, Matthew Cooper added, “Great news on the face of it and figures that portray a very healthy market. However, it’s probably a little too soon to pop the champagne and wave goodbye to any detrimental pandemic induced market declines.
“Current approvals figures may well be skewed by sales agreed prior to the pandemic hitting the market and with the furlough scheme soon to end, it’s unlikely this level of momentum will be maintained in the long-term.
“For the time being, this honeymoon period of mortgage approvals and house price growth will help boost market sentiment. But we could soon find ourselves in a very different place over the coming months.”