The average borrowed amount by those with mortgages has “soared” during the pandemic, according to research by Trussle.
Findings from the online mortgage broker revealed that the average amount that homeowners looked to borrow increased from just above £170,000 in August 2019 to approximately £190,000 in August 2021.
Trussle suggested that declining interest rates offering better deals for buyers has been one of several factors that have led to homeowners seeking larger mortgages.
The stamp duty holiday has also been a “key driver” in people’s ability to afford larger mortgages Trussle stated. The broker’s data showed that when the holiday was announced in July last year, there was a huge uptick in the loan amounts homebuyers were seeking. In the two months between June and August 2020, the average amount borrowed jumped from £179,755 to £200,104.
Mortgage borrowing amounts also continued to increase during 2020 and into this year. In May, the average mortgage loan size for Trussle customers reached a 24-month high of £210,057.
Trussle head of mortgages, Miles Robinson, commented: “People have been incredibly sensible during the pandemic and as a result households’ savings have grown considerably.
“This, coupled with incentives like the stamp duty holiday and lower interest rates, has meant that home buyers have had much more flexible budgets when it comes to finding their perfect home.”
Trussle’s research also indicated that while there has been little change in household income during the pandemic, households did decrease their spending on non-essential items over lockdown. As a result, savings as a proportion of household disposable income increased during the COVID lockdown from January to March 2021.
Robinson added: “We shouldn’t presume that buyer appetite for bigger mortgages is here to stay. As the UK continues on its path to reopening, spending on non-essential items will understandably begin to increase again.
“As such, homebuyers’ savings will likely begin to shift back towards pre-pandemic levels and mortgages will shrink accordingly.”
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