The number of mortgage approvals reached their highest level since 2007 last year as buyers took advantage of the stamp duty holiday.
The housing market remained resilient in the face of volatility and essential closure of the market during the first lockdown.
There were 818,500 mortgage approvals over 2020, up from 789,100 the previous year, according to Bank of England data released today.
There was a significant uptick in lending in the second half of the year after a record low of 9,400 approvals in May. Borrowers rushed to take advantage of the stamp duty holiday introduced over the summer.
Although approvals fell back to 103,400 in December, down from 105,300 in November, it was still the highest level since August 2007.
Former RICS residential chairman Jeremy Leaf is not complacent: “While these figures are always a good indicator of direction of travel for the market, we won’t be getting carried away, not least because the year’s lower for these approvals appeared a couple of months after the first lockdown.”
Additionally this level of momentum is unlikely to be sustained as the stamp duty holiday winds down at the end of next month.
Samuel Tombs, Pantheon’s chief UK economist predicts the vaccine rollout will also mean “people will be content again with their pre-pandemic housing choices by the summer.”
The BoE’s data also showed that consumers paid down a record £16.6bn in debt last year as spending options became limited during lockdown.
“An overall reduction in consumer debt, combined with high levels of cash savings, and pent up demand for holidays, meals out and other leisure activities, could prove to be an explosive powder keg that will help drive the economy when it finally opens up again,” AJ Bell financial analyst Laith Khalaf says.