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Mortgage approvals hit 13-year high

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The mortgage market remains exceptionally busy, but how long can the mini-boom really last?
Mortgage approvals hit 13-year high

Mortgage borrowing was £3.1 billion in August, up from 2.9bn in July, according to the Bank of England.

Borrowing has risen from the low of £0.5bn lent in April when the UK was in full lockdown.

The Bank said the number of mortgages approved by lenders for house purchase increased sharply to 84,700, the highest since October 2007.

This was up from just 66,300 in July.

Andrew Montlake, managing director at mortgage broker, Coreco, said: “The market remains exceptionally busy although it is no longer first-time buyers driving things but second and subsequent home movers.

“First-time buyers have been decimated by changes in mortgage lenders’ appetites, with few products available at 90% LTV and income multiples becoming ever more conservative.

“People who have decent equity in their property, secure jobs and are looking to move away from cities to gain bigger homes and more space given the new WFH culture, are the ones best able to take advantage of the stamp duty holiday.

“Mortgage approvals may have risen sharply but the market, given the uncertainty of the Covid economy and Brexit, remains on a knife edge.”

Paul Stockwell, chief commercial officer of Gatehouse Bank, was more optimistic: “A V-shaped recovery in the UK property market appears to be on track, with mortgage approvals increasing past pre-pandemic levels with 11,000 more agreed in August compared to February.

“Lending approvals, coming early in the conveyancing process, are one of the leading indicators of market activity so August’s figures suggest a strong autumn to come.”

Low rates remain

Interest rates on new and outstanding mortgages were little changed in August, said the Bank of England. New mortgage rates were 1.72%, while the interest rate on the stock of mortgage loans were 2.14% in August.

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