"The market continues to work hard to progress with the influx of cases as a result of the recent extension to the tax cut"
Net mortgage borrowing was £6.2 billion in February, the strongest since March 2016 when borrowing was also boosted by changes in stamp duty, according to the latest statistics from the Bank of England.
The strength on the month reflected higher gross lending of £27.7 billion, close to March 2016's figure.
Mortgage approvals for house purchase were 87,700 in February: while higher than in February 2020, they have fallen from a peak of 103,700 in November 2020.
Approvals for remortgaging with a different lender rose slightly to 34,300 from 32,600 in January 2021.
Interest rates paid on newly drawn mortgages rose 6 basis points to 1.91% in February, slightly higher than the rate in January 2020 (1.85%) and a series low of 1.72% in August 2020.
Vikki Jefferies, proposition director at Primis Mortgage Network, commented: “It’s promising to see that the mortgage industry continued to show positive signs of recovery in February with net borrowing on the rise. This is largely due to the Chancellor’s stamp duty holiday which has gone a long way towards stimulating buyer appetite.
“The market continues to work hard to progress with the influx of cases as a result of the recent extension to the tax cut but over the longer term, it will also have to deal with the growing number of borrowers who continue to face financial hardship due to Covid-19. Understandably, many customers will be seeking professional support on the ways in which they can protect themselves against further financial trouble. Advisers should reach out to their clients now and ensure they are keeping protection central to the advice process to help safeguard their clients' finances now and in the future."
John Phillips, national operations director at Just Mortgages and Spicerhaart, added: “The housing market is an impressive juggernaut that continues to march forward. While mortgage approvals are down slightly from the peak in November 2020, they are still higher than anyone expected. Undoubtedly, action has been encouraged by the stamp duty holiday and the extension should ensure there is no huge drop-off for the moment.
“However, this is only part of the story. A year on from the start of the first lockdown, what is clear is that the pandemic has spurred people into action. Whether it is those looking to move for more outside space. Or the lack of commute meaning some are choosing to leave the city, in a year where our lives were turned upside down, priorities were shaken up.
“With the extension to the stamp duty holiday, the reintroduction of 95% LTV mortgages and the furlough scheme running till September, the property market should keep moving at a pace and we may see records broken for the first quarter of 2021.”