Mortgage approvals for house purchase increased to 84,700, the highest since October 2007, according to the latest Money and Credit statistics from the Bank of England.
Net mortgage borrowing was £3.1bn in August which stayed consistent with the total recorded in July (£2.9bn), whilst effective mortgage interest rates were broadly unchanged.
The Bank of England suggests that these latest figures signal signs of recovery in August, despite mortgage borrowing being troughed at £0.5bn in April and still being slightly below the average of £4.2bn in the six months to February 2020.
The increase on the month reflected slightly higher gross borrowing of £18.8bn, although it is still below the pre-COVID level in February of £23.7bn.
In total, there has been 418,000 approvals in 2020, compared with 524,000 in the same period in 2019.
Approvals for remortgage are little changed compared to July at 33,400, which is a 36% decrease from figures recorded back in February.
New mortgage rates were 1.72%, a decrease of one basis point on the month, whilst the interest rate on the stock of mortgage loans fell one basis point to 2.14% in August.
Dave Harris, chief executive at more2life, reacted to the data: “Although today’s findings show overall lending in the mortgage market still falls short of pre-crisis levels, there are positive signs of growth.
“Month-on-month increases to new mortgage approvals suggest that buyers have been taking advantage of the products on offer to help manage borrowing during the coronavirus crisis – and lenders and advisers have played a crucial part in this.
“At the same time, the equity release market has also been working hard to support older borrowers, with product innovation high on the agenda.
“The Equity Release Council recently found that product options in this market have increased by 29% year-on-year, further helping to ensure older borrowers benefit from greater choice and flexibility at a time when they arguably need it most.
“Seeking professional, specialist advice is crucial for older homeowners ensure they are aware of solutions like equity release which could help them develop a long-term financial plan.”
David Whittaker, chief executive at 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.”