The stamp duty holiday extension boosted net mortgage borrowing to its highest level since March 2016, according to new Bank of England data.
Net mortgage lending hit £6.2bn in February, with mortgage approvals for house purchase reaching 87,700.
Andrew Montlake, managing director at mortgage broker Coreco, said the stamp duty extension was pivotal in fuelling the rise.
“It’s no surprise net mortgage borrowing hit a five-year high in February, as a large number of stamp duty holiday-fuelled transactions that started last year completed in advance of the deadline.
“Though up on the same month last year, mortgage approvals were understandably lower than the November high as a lot of people, by February, felt they had missed the stamp duty deadline.”
Approvals for mortgaging with a different lender rose five per cent from January to 34,300.
Meanwhile, interest rates paid on newly drawn mortgages rose six basis points to 1.91 per cent in the same period.
Despite approvals soaring higher than in February 2020, they have fallen from a peak of 103,700 in November last year.
Islay Robinson, CEO of Enness Global Mortgages, said that a reduction in mortgage approvals “was always on the cards” as the UK approached the stamp duty holiday deadline.
“Of course, with a stamp duty holiday extension now in place, we can expect this foot off the pedal to be a momentary trend and a further spike in buyer demand to reappear in the coming months.”