Wednesday 14 October 2020 12:01 am

Mortgage applications soar after coronavirus lockdown lifted

Mortgage applications soared after lockdown was lifted this summer, reaching an estimated value of £216bn, however the closure of the housing market means lending is expected to be down compared to last year.

Pent-up demand and government incentives helped to jolt the UK property market back to life after restrictions were eased following the UK coronavirus lockdown.

Read more: The answer to Britain’s housing crisis is more houses – not risky mortgages

The latest research showed that mortgage applications were up 13 per cent year on year in July, followed by rises of 25 per cent in both August and September. 

According to data from Experian, 1.2m mortgages will be agreed this year at a value of £216bn, compared to 2019’s £250bn across 1.5m loans. 

Lenders are facing challenges to make sure the loans they offer are affordable for borrowers in the long-term. 

About 1.9m mortgage accounts are currently subject to an Emergency Payment Holiday (EPH). These mortgage accounts have an average balance of £150,000, 30 per cent higher than the £114,000 owed by those who have not paused repayments.

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

Read more: Banking sector warns against irresponsible lending after PM’s low deposit mortgage pledge

“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.

“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.”