"Whilst the September numbers were likely boosted by the extended stamp duty holiday, the drivers motivating people to buy or move home remain strong."
Individuals borrowed £9.5 billion of mortgage debt in September, down from £4.4 billion in August but the highest since June 2021 when net borrowing reached a record of £17.1 billion. Net borrowing in September was £2.9 billion above the 12 month average to June 2021, when the full stamp duty holiday was in effect.
Gross repayments also increased to £20.7 billion from £17.7 billion in August.
Approvals for house purchases, an indicator of future borrowing, fell to 72,600 in September, from 74,200 in August. This is the lowest since July 2020, but remains above pre-February 2020 levels. Approvals for remortgaging with a different lender rose slightly to 41,500 in September. This remains low compared to the months running up to February 2020, but is the highest since March 2020.
The ‘effective’ interest rate on newly drawn mortgages fell 4 basis point to 1.78% in September. That is below the rate in January 2020 (1.85%) and the series average since March 2020 (1.83%).
Gareth Lewis, commercial director at MT Finance, said: "These figures are relatively positive in the main, apart from the drop in mortgage approvals. Naturally there was going to be more activity ahead of the end of the stamp duty holiday but with mortgage approvals falling, it will be interesting to see how the market fares over coming months. Much will depend on how many properties come to market, which will have an impact on the number of transactions."
Stuart Wilson, corporate marketing director at more2life, commented: “September marked a continuation of one of the busiest periods that many advisers and lenders have seen for a long time, fuelled by the stamp duty holiday. Following the record highs in the summer, mortgage approvals and net mortgage borrowing have thus far remained strong, with many pushing on with their plans regardless of their ability to exchange before the tax break ended in September, due to having already incurred costs or pressing lifestyle needs.
“The later life lending market also performed well in September, with product choice hitting an all-time high and total lending in Q3 up by almost a fifth (19%) on the same quarter a year ago. The stamp duty holiday has been instrumental in raising awareness of the option to use equity release to fund a house purchase and we are confident that borrowers will continue to pursue this option long into Q4 and beyond. As such, it is vital that advisers are well-informed about their clients later life lending options and are prepared to support a growing number of customers in this demographic.”
Toni Smith, chief operating officer at Primis, added: “Today’s figures highlight the ongoing strength of our housing market. Whilst the September numbers were likely boosted by the extended stamp duty holiday, the drivers motivating people to buy or move home remain strong.
“However, as we start to see an increase in the cost of living and a potential rate rise looming, many households will find their finances squeezed. Within this context, the role brokers play in supporting their customers to access the best possible deal for their circumstances will be vital.
“With the last quarter of the year also set to bring a surge in remortgage activity, there is huge opportunity for those brokers proactively having conversations with their clients. As borrowers across the country look at their refinancing options, having the support of a broker who can guide them to a product that suits their specific needs, will be invaluable – and it will likely further strengthen their relationship with the broker for years to come.”
