Pent-up demand and government incentives jolted the UK’s property market “back to life” this summer, despite caution from lenders about COVID-19, a new report from Experian has suggested.

The report, titled Lending with Confidence: A Data-Led Analysis of the Mortgage Market, revealed that mortgage applications increased year-on-year by 13% in July, followed by rises of 25% in both August and September.

Data from Experian also suggested that 1.2 million mortgages will be agreed at a value of £216bn this year.

However, the pause in the market caused by lockdown means lending is still likely to be down on the figure in 2019, when £250bn was recorded across 1.5 million loans.

“People moving home is good news for the economy, as activity in the property market fuels growth in related services,” said Experian managing director of data services, Lisa Fretwell. “Tax incentives and an extended period indoors have encouraged people to make a move this summer, as our analysis shows.

“Most moves require a mortgage and, while lenders want to extend new loans, they have a responsibility to ensure homebuyers are only taking on what they can afford in the long-term.”

Experian said the surge in mortgage applications has come as lenders face “considerable challenges” in ensuring the loans they offer are affordable for borrowers in the long-term.

The report showed that around 1.9 million mortgage accounts are currently subject to an Emergency Payment Holiday (EPH), with these mortgage accounts having an average balance of £150,000 – 30% higher than the £114,000 owed by those who have not paused repayments.

Data from the report also showed that 25% of people on payment holidays have experienced an increase in disposable income as they have cut back spending elsewhere. Experian suggested that people in this group are anticipating their income may change in the future, so have taken the chance to build resilience.

Fretwell added: “COVID-19 has complicated the financial situation for millions of people, and the challenge for lenders to understand each applicant’s circumstances has become more difficult as a result. Both traditional and new data sources will help lenders to make the highest quality decisions to keep Britain moving.”

Share Story: