The second quarter of 2021 saw the highest quarterly levels of homeowner purchase activity in 13 years, according to a new report published by UK Finance.

This comes as 124,520 homeowner purchases were recorded in June, the highest monthly level since comparable records began in 2005.

UK Finance’s Household Finance Review suggested that recent lending has been driven in large part by the stamp duty holiday – a combination of purchases brought forward to take advantage of the tax break, as well as additional activity that might not have taken place were it not for the holiday. The banking body also said that current levels reflect delayed purchase activity from when the housing market was put on pause in the first set of lockdowns in Q2 2020.

With most delayed purchases now likely to have completed and the stamp duty holiday now in its final tapering phase, demand had been expected to decline, although UK Finance stated that the stamp duty holiday is “not the only factor in play”.

“The extension of the stamp duty holiday has played a vital role in the positive statistics published today by UK Finance,” commented TMA Club development director, Lisa Martin.

“This coupled with the reintroduction of 95% mortgage products, record low fixed interest rates and other government support schemes has provided a boost to the market throughout Q2.

“However, with final tiering of the stamp duty holiday and other government support soon coming to an end, it will be important that strong, credible alternative schemes are developed and adopted for the housing market to continue to grow and thrive.”

The Household Finance Review also highlighted that mortgage arrears levels remain at low levels, due in part to payment deferrals and the furlough scheme that was introduced last year.

However, UK Finance’s report indicated that the number of borrowers in later arrears – which are those 10% or more of the total outstanding balance – have shown a gradual increase, with this group of borrowers largely consisting of those who were in payment difficulties before the pandemic.

The banking body warned that the the winding down of the furlough scheme as well as the government’s withdrawal of the temporary increase to Universal Credit in Q3 may cause some customers who do not return immediately to full employment to encounter increased payment difficulties.

Legal & General Mortgage Club director, Kevin Roberts, commented: “Though it is brilliant to see that those in a position to move home have done so successfully, many others have seen their financial circumstances complicated significantly by the crisis.

“People across the UK have needed to access financial support – everything from mortgage payment deferrals to income support and other benefits – and they now likely need extra help when it comes to managing their mortgage.

“This is where seeking financial advice is key, as independent mortgage brokers can help these people to keep their monthly repayments to a minimum by accessing a new deal, even if that means looking beyond the high street.”

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