Economy recovers some of lost output during Q3 – UK Finance

While the UK economy has now recovered some of the lost output from the Q2 lockdown, many households are still feeling the major financial and social disruptions caused by the pandemic, according to UK Finance.

The banking body’s latest Household Finance Review for Q3 2020 suggested incomes are still “coming under considerable pressure”.

The review stated that house purchase lending in the third quarter “recovered strongly” from the collapse in Q2, and activity by September was nearly back to the levels seen a year ago. UK Finance said that applications data indicate a possible return to annual growth in Q4, but warned the recent second wave of lockdowns “may impact this”.

Commenting, PRIMIS Mortgage Network proposition director, Vikki Jefferies, suggested the figures make it clear that the mortgage market continued its recovery during the third quarter of 2020.

“Lending volumes saw an uptick throughout this period as lenders ensured that borrowers could still access the solutions they needed, and advisers helped clients progress with their cases amid the disruption caused by Covid-19,” Jefferies said. “Today’s statistics are testament to the hard work of these two groups, and their efforts will continue to fuel the recovery of the housing sector as the crisis endures. 
 
“It’s a broker’s responsibility to ensure their clients’ finances are protected against possible hardship, so putting adequate cover in place for clients should always be front of mind – especially in the current climate.”

UK Finance’s review also suggested purchase activity is “likely to be strong” in Q1 2021 as households seek to take advantage of lending support, such as the stamp duty holiday and current Help to Buy scheme before their end-March closure.

However, the banking body also highlighted that beyond this point, demand is likely to come under pressure.

“The Chancellor’s housing market stimulus, in the form of the stamp duty holiday, has taken house purchase of to a level that none of us expected back in April, at the start of the pandemic,” commented Landbay CEO, John Goodall. “There has been a positive rush to buy houses both residential and buy-to-let.

“While of course the overall the number of housing transactions this year will be less than they would have been without the pandemic, the Chancellor’s intervention has meant that many of those who want to buy, have been able to. Combine this with record low mortgage interest rates and it is a very good time to buy for those who can afford to do so.

“The rush now will be to get those deals over the line before the stamp duty holiday ends. With valuers, conveyancers and many big lenders facing backlogs, it will be all hands to the pump until 31 March.”

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