The number of mortgage approvals for house purchase continued to increase sharply in August, rising to 84,700 from 66,300 in July, new data from the Bank of England (BoE) has revealed.
This was the highest number of approvals recorded since October 2007 although the Bank suggested the trend only partially offset the weakness in the market 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 remortgage, those that capture remortgaging with a different lender, were little changed in comparison to July at 33,400 – a level 36% lower than in February.
“Despite a reduction in the availability of high LTV products, we’re yet to see the level of mortgages approvals tail off due to overwhelming levels of buyer demand in recent months,” Enness Global Mortgages managing director, Hugh Wade-Jones, commented. “Approvals are at their highest levels in nearly 13 years.
“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.”
The BoE’s data also showed that on net, households borrowed an additional £3.1bn secured on their homes during August, following the borrowing of £2.9bn reported in July.
Mortgage borrowing sunk to a trough of £0.5bn in April, and is still a little below the average of £4.2bn in the six months to February 2020. However, the BoE stated that the increase on the month reflected slightly higher gross borrowing of £18.8bn, although it is also still below the pre-pandemic February level of £23.7bn.
“As indicated by today’s figures, the mortgage industry continues to recover from the impact of the COVID-19 crisis, with net borrowing on the rise,” said PRIMIS Mortgage Network proposition director, Vikki Jefferies.
“Looking ahead, the next couple of weeks will be a crucial time for the thousands of customers nearing the end of mortgage payment holidays. Now is the perfect time for advisers to be getting in touch with these clients to re-evaluate their circumstances and discuss their next steps.”
Bluestone Mortgages managing director, Steve Seal, added: “It is reassuring to see small signs of recovery across the industry, as mortgage lending picks up and consumer confidence gradually returns.
“However, while this may be the case over the short-term, the long-term picture will present the market with another challenge – supporting those who have been significantly impacted by the COVID-19 crisis.
“Specialist lenders will be essential to the recovery of the sector, providing individuals in more vulnerable situations with the financial lifeline they need. This is why it is important that lenders and other key players in the specialist market help brokers gear their businesses up so they can meet the heightened demand from non-standard customers.”
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