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BoE: Mortgage approvals at their highest level since 2007

Jessica Nangle

October 29, 2020

Mortgage approvals in September reached their highest number since 2007, according to the latest Money and Credit Statistics from the Bank of England.

The latest statistics from the BoE showed the mortgage market had strengthened on an overall basis last month, with a pick up in both mortgage borrowing and approvals.

The number of mortgage approvals for house purchase continued increasing sharply in September, to 91,500 from 85,500 in August.

This was the highest number of approvals since September 2007, and is 24% higher than approvals in February 2020.

Approvals in September were around 10 times higher than the trough of 9,300 approvals in May.

Households borrowed an additional £4.8bn secured on their homes, following borrowing of £3bn in August.

Mortgage borrowing troughed at £0.2bn in April but has since recovered, reaching levels slightly higher than the average of £4bn in the six months to February 2020.

The increase on the month reflected higher gross borrowing of £20.5 bn, although this remains below the February level of £23.4bn.

Approvals for remortgage are slightly lower than in August, at 32,700, and remain 38% lower than in February 2020.

The effective interest rates on newly drawn, and the outstanding stock of, mortgages were little changed in September.

New mortgage rates were 1.74%, an increase of two basis points on the month, whilst the interest rate on the stock of mortgage loans fell one basis point to 2.13% in September.

Steve Seal, managing director at Bluestone Mortgages, commented on the statistics: “It is promising to see that the recovery of the housing market post-lockdown is continuing as lenders focus on progressing with new and existing cases.

“However, with payment holidays and the government’s furlough scheme coming to an end, lenders will be faced with another priority – supporting borrowers who continue to face financial hardship beyond October.

“While additional support will be crucial for many households, the harsh reality is that this will impact people’s credit scores and, as a result, they may not be eligible for mainstream lending later on.

“Therefore, it is likely that many borrowers will need extra support in the future when it comes to securing financing, and the specialist market will be essential for providing these individuals with the lifeline they need.

“This is why it is important that specialist lenders work closely with brokers to prepare for the long-term implications of Covid-19, so they can meet the heightened demand from consumers expected over the coming years with efficiency.”

Lisa Martin, development director at TMA, added: “Housing market activity improved further in September, with a rise in buyer enquiries and transactions providing a welcome boost to the industry.

“The focus for lenders and advisers has been the progression of mortgage cases, notwithstanding the challenges with servicing, and processing the pent-up demand from buyers looking to take advantage of the Chancellor’s stamp duty holiday.

“Over the coming months, conveyancers can also expect to face greater demand as a result of the recent surge in mortgage business, and they should take time to prepare for this.

“However, another priority for the market over the short-term will be supporting customers who continue to face financial hardship – and this is where brokers can really show their value.

“For example, the next couple of weeks will be a crucial time for thousands of borrowers who are coming to the end of a mortgage payment holiday and are deciding their next steps.

“Now’s the perfect time for brokers to get in touch with these clients, review their current circumstances and discuss what the suitable options are.”


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