The mortgage market strengthened further during September as net household borrowing hit £4.8bn secured on homes, new Bank of England (BoE) data has revealed.

The BoE revealed that this latest pickup, which followed borrowing of £3.0bn in August, also followed high levels of mortgage approvals for house purchase recorded over recent months.

The data showed that mortgage borrowing troughed at £0.2bn in April, but has since recovered to reach levels slightly higher than the average of £4.0bn in the six months to February. The increase on the month reflected higher gross borrowing of £20.5bn, although the Bank stated that this remains below the February level of £23.4bn.

“With payment holidays and the government’s furlough scheme coming to an end, lenders will be faced with another priority – supporting borrowers who continue to face financial hardship beyond October,” commented Bluestone Mortgages managing director, Steve Seal.

“While additional support will be crucial for many households, the harsh reality is that this will impact people’s credit scores and, as a result, they may not be eligible for mainstream lending later on.

“Therefore, it is likely that many borrowers will need extra support in the future when it comes to securing financing, and the specialist market will be essential for providing these individuals with the lifeline they need.”

The BoE’s data also revealed that the number of mortgage approvals for house purchase continued to increase sharply in September, to 91,500, up from 85,500 in August. This was the highest number of approvals since September 2007, and is 24% higher than approvals in February this year.

Approvals in September were around 10 times higher than the trough of 9,300 approvals in May, the BoE also revealed. Approvals for remortgage, which only capture remortgaging with a different lender, were slightly lower than in August, at 32,700, and remain 38% lower than in February.

TMA development director, Lisa Martin, said: “The focus for lenders and advisers has been the progression of mortgage cases, notwithstanding the challenges with servicing, and processing the pent-up demand from buyers looking to take advantage of the chancellor’s stamp duty holiday.

“Over the coming months, conveyancers can also expect to face greater demand as a result of the recent surge in mortgage business, and they should take time to prepare for this.”

Enness Global Mortgages managing director, Hugh Wade-Jones, added: “First-time buyers have seen the range of products open to them dwindle, with many required to stump up larger deposits to secure a mortgage.

“However, this tightening of the belt is yet to cause any dent in top-level market activity and mortgage approval figures are soaring. This growth has been maintained by a high level of deals that continue to be done by second and third rung buyers, in particular.

“We’ve also seen a heightened degree of activity from international buyers and those at the very top price thresholds who have seen the improving health of the regular market as their cue to act.

“With the tank essentially full and with such huge numbers of buyers still entering the fray, it should be some time before we see the market run out of fuel even with a more selective mortgage approval process in place.”

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