The house purchase market continued to rebound strongly in July as mortgage approvals for new properties rose sharply, however remortgage business remained static dragging down overall market totals.

Bank of England data showed there were 66,300 approvals for purchase in July and although this figure remained short of the 73,600 peak in February, it was on par with the whole of 2019 which saw an average of 65,800 purchase approvals per month.

Remortgage approvals were unchanged from June, with 36,000 completed – still below the 49,000 average from 2019 and February’s peak of 52,600.

However, internal product transfers are not included in the Bank of England data which only accounts for remortgages completed with a new lender.

Overall 112,000 mortgages were approved in July accounting for £17.4bn in new lending – around 87 per cent and 82 per cent of the totals for July 2019 respectively.

These figures were 80 per cent and 74 per cent of the transaction and lending totals completed in February.

‘Quite astonishing rebound’

Hugh Wade-Jones, managing director of Enness Global Mortgages, noted the rebound was “quite astonishing” given the dire position of the market just a few months ago.

“There is no doubt the huge surge of buyer demand seen once the market reopened has been seriously turbo-charged due to the stamp duty holiday announced shortly after,” he said.

“As a result, we’ve seen the number of people approved for a mortgage rebound from the depths of pandemic paralysis in May to hit almost the same levels as this time last year in just two months, with the current trajectory sure to return the market to pre-lockdown levels in no time.

“The rate of this return to form really shouldn’t be underestimated and these notably heightened levels of buyer demand should prove just the medicine for the UK property market, reversing any pandemic decline in house price growth seen during lockdown.”

Mortgage finance ‘contracting by the day’

However, others in the market believe the burst of activity may not be maintained as lenders continue to further restrict lending.

Sam Harhat, head of financial services at Andrews Property Group, said he was expecting approvals to tail off again in August to “reflect the significant tightening of lender criteria”.

“Over the past month or so, it’s as if the property and mortgage markets have been operating in two entirely different realities,” he said.

“The demand for property is exceptionally strong, a result of pent-up demand, the low cost of borrowing and the stamp duty holiday, while the availability of mortgage finance has been contracting by the day.

“For 75 per cent loan to value (LTV) mortgages and below, there is a huge amount of lender competition, but at higher LTVs finding a lender is like looking for a needle in a haystack.

“Where borrowers see opportunity, lenders see growing economic uncertainty, especially in the autumn as the furlough scheme draws to a close.”