"As incentives like the Chancellor’s stamp duty holiday drive buyer appetite, key players in the market are working hard to support borrowers with their purchases and help get activity moving once more."
The number of mortgage purchase approvals "continued increasing sharply in August", rising to the highest figure seen since October 2007, according to the latest Money and Credit figures from the Bank of England.
Approvals for purchases rose to 84,700 from 66,300 in July, however the Bank says this "only partially offsets weakness seen between March and June". In total, there have been 418,000 approvals in 2020, compared with 524,000 in the same period in 2019.
Approvals for remortgaging with a different lender are little changed compared to July, at 33,400 and remain 36% lower than in February 2020.
Net mortgage borrowing was £3.1 billion in August, following borrowing of £2.9 billion in July. Mortgage borrowing troughed at £0.5 billion in April, and is still a little below the average of £4.2 billion in the six months to February 2020. The increase on the month reflected slightly higher gross borrowing of £18.8 billion, although it is still below the pre-Covid February level of £23.7 billion.
Vikki Jefferies, proposition director at Primis Mortgage Network, commented: “As indicated by today’s figures, the mortgage industry continues to recover from the impact of the Covid-19 crisis, with net borrowing on the rise. As incentives like the Chancellor’s stamp duty holiday drive buyer appetite, key players in the market are working hard to support borrowers with their purchases and help get activity moving once more.
“Looking ahead, the next couple of weeks will be a crucial time for the thousands of customers nearing the end of mortgage payment holidays. Now is the perfect time for advisers to be getting in touch with these clients to re-evaluate their circumstances and discuss their next steps. For borrowers who may be considering applying for another payment holiday before the October deadline, opting for an alternative solution may be better suited to their current needs – and this is where advisers will continue to play an essential role.”
Rob Barnard, director of intermediaries at Masthaven, said: “Today’s figures show that the housing market has rebounded from the lows of April and May in a way that no-one predicted. A surge in buyer demand combined with the impact of the stamp duty holiday has provided a welcome boost to the industry as homebuyers look to take advantage of the government initiative. The mortgage and short-term lending sectors have proven to be remarkably resilient in the face of unprecedented circumstances, adapting to new ways of working and ensuring they remain open for business.
“However, whilst it is clear that many customers are driving demand in the housing market, there will be others who are struggling to secure mainstream finance, particularly those who have been financially impacted by the pandemic. Specialist lenders and mortgage brokers must continue to work together in the months to come to ensure these non-traditional customers find the right financial solutions for their circumstances.”
David Whittaker, CEO of Keystone Property Finance, added: “There were no signs of the traditional summer slump this August, with the mortgage market experiencing a ‘mini boom’ and showing positive signs of recovery following an extremely challenging period. Within the buy-to-let market, falling rates, pent up demand and the stamp duty holiday have no doubt acted as an incentive for landlords and investors to take this opportunity to diversify their property portfolios.
“However, whilst today’s figures give us reason to be cautiously optimistic about the market, a raft of regulatory changes coming into force this year means buy-to-let investors must continue to seek the advice of brokers who can help them navigate this complex landscape. As we start to emerge from the crisis and the UK returns to some form of normality, we’re committed to working closely with our broker partners to ensure the market can meet the unique needs of each buy-to-let landlord.”
Andrew Montlake, managing director of 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.
“People who are looking to purchase a second or holiday home are also exceptionally busy.
“Landlords have also had something of a renaissance as they stand to gain from some of the lowest rates in the buy-to-let market we have seen and are no longer having to compete with first-time buyers.
“Right now, the market is characterised by high demand for mortgages and people wanting to buy, but a lack of suitable products.
“Lenders continue to struggle with capacity and are also wary of moving up the risk curve given the precipice we are approaching in the form of the end of the furlough scheme and a potentially messy Brexit scenario.
"Mortgage approvals may have risen sharply but the market, given the uncertainty of the Covid economy and Brexit, remains on a knife edge.
“With lender criteria and appetites changing almost by the day, the role of independent brokers has never been more important.”