Thursday 29 October 2020 2:49 pm

Mortgage approvals soar to 13-year high as UK housing market booms

Mortgage approvals jumped again in September to hit a 13-year high as pent-up demand and the stamp duty holiday fuelled the housing market despite the economy’s fragile state.

Approvals of mortgages for house purchase rose sharply to 91,500 in September from 85,500 in August, the Bank of England said today. Analysts had expected the number to slip back after it soared in August.

Read more: Rush to beat stamp duty rise sees UK house prices jump again

The September approval figures were the highest since the same month in 2007. And they were 24 per cent higher than approvals in February, before the coronavirus pandemic.

Britons borrowed heavily to move house in September, with net mortgage borrowing at £4.8bn, up from £3bn in August. 

It is the latest evidence of the booming housing market which has caught many by surprise. Usually during a major recession house prices drop. But they have soared to record highs, according to various surveys.

Property market strong but consumers ‘hunker down’

Analysts say the pent-up demand from when the market was shut during March and April has been a major source of transactions. Chancellor Rishi Sunak’s stamp duty holiday, which has pushed up the property tax payment threshold to £500,000, has also had a strong effect.

There are currently around 140,000 more buyers waiting to complete property transactions than there were a year earlier. That is according to a survey from property website Zoopla, published yesterday.

However, today’s Bank of England lending figures showed that rising coronavirus cases and new restrictions have affected consumers.

Read more: UK public borrowing unexpectedly picks up to hit record £209bn this year

Britons made net repayments – that is, they repaid more than they borrowed – of £600m in September. They had borrowed in both July and August, after borrowing rates plunged during the lockdown, when there were few things to spend money on.

Simon French, chief economist at Panmure Gordon, said it was the “first hard data signal that consumers are hunkering down for a difficult couple of quarters”.

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