Housing market 'in rude health' with rise in new mortgages applications

New approved mortgages surged to 66,300 in July, up from 39,900 in June and May’s record low of 9,300. Experts said the rise was “astonishing”, leaving the market “in rude health” while consumer confidence is also springing back. Hugh Wade-Jones, boss of Enness Global Mortgages, called the soaring number of home loans “really quite astonishing given the dire position of the market just a few short months ago”.

He added: “We’ve seen the number of people approved for a mortgage rebound from the depths of pandemic paralysis to hit almost the same levels as this time last year in just two months.

“The current trajectory is sure to return the market to pre-lockdown levels in no time. The rate of this return to form really shouldn’t be underestimated.”

The Bank of England’s July figures show approvals were 10 percent below February’s 73,700 – but August is set to beat July.

Meanwhile consumer borrowing has increased to £1.2billion – signalling a major pick-up in retail sales.

The demand for mortgages comes after Chancellor Rishi Sunak slashed the amount of Stamp Duty buyers must pay. Until April 1 next year, there is no duty on homes of £500,000 and under, benefiting around nine in ten buyers to the tune of up to £15,000.

Richard Pike, of mortgage software firm Phoebus Software, said: “All the evidence points to a continued recovery, with many estate agents reporting a surge in properties coming to market.

Various property signs outside a block of flats advertising homes for sale, let or sold

Consumer confidence is springing back, experts say (Image: Richard Newstead/Getty Images)

“The housing market is in rude health and likely to remain that way at least until April.”

Gareth Lewis, from property lender MT Finance, added: “There are positive signs indicating plenty of consumer confidence out there as people are borrowing money.

“There are more ‘for sale’ and ‘sold’ signs springing up, and even tales of gazumping. August’s numbers will show even more of an uptick once the stamp duty holiday starts to filter through to figures.

“July’s numbers would have been better still if transactions weren’t taking so long. Lenders still have staff furloughed or working from home.”

The Bank’s data also showed mortgage borrowing was up to £2.7billion in July, compared to £2.4billion in June.

This is still below the average of £4.2billion in the six months to February. Meanwhile an extra £1.2billion of unsecured credit was borrowed by consumers in July, ending four straight months of repayments – the longest stretch since the aftermath of the financial crisis.

The increase, to slightly above the average monthly amount of £1.1billion in the 18 months to February, coincides with a continued pick-up in retail sales.

Pablo Shah, senior economist at the Centre for Economic and Business Research, said: “The period of lockdown has built up a degree of demand for spending and therefore borrowing.”

I wasn’t sure about buying…but now is a positive time

Father-of-three Dave Dickson was nervous about dipping into the postlockdown property market. But he has sold his three-bedroom home in Solihull, in the West Midlands, is about to benefit from the stamp duty holiday and had no problems finding a mortgage lender.

The 44-year-old head of training for estate agent Purplebricks and his partner Sally Farmer are now looking to spend about £400,000 on a four-bedroom detached home.

Dave and Sally Dickson

Dave and Sally Dickson (Image: Supplied)

Delighted Mr Dickson, who has two boys Thomas, 19, and Charlie 17, and stepdaughter Maddy, 15, said: “I’ve been thinking of moving for a long time.

“But I wasn’t sure the aftermath of a pandemic was the right time.

“However the combination of the stamp duty holiday and the higher rate of mortgage approvals by lenders has made it really positive for us.

“It’s no surprise to me that the UK property market is on the up. Millions of people either want to move or perhaps have to.

“The boost to the national economy will be terrific.”

Mortgage application

New approved mortgages surged to 66,300 in July (Image: Peter Dazeley/Getty Images)

Comment by Vic Darvey

It’s very encouraging to see such a buoyant housing market, which can only benefit the UK economic recovery.

We’ve reported a record level of instructions in July as the impact of the stamp duty holiday began to filter through.

Other factors such as low interest rates and banks lending at high levels again have also contributed to a massive surge in mortgages: there has never been a better time to move home.

The Covid pandemic has led to a real change in what people are looking for as work and travel habits change. More than ever, we are seeing a change in buyers’ behaviour due to the effects of the lockdown and remote working. Consumers are freer to explore moving to the countryside or further away from their workplace, with home offices and multi-functional spaces now a priority for most.

Commuting times and proximity to city centres are becoming less relevant.

Technology changes to the way we buy and sell homes have been massively accelerated, too. Digital services such as virtual viewings came into their own. Not only did they allow for transactions to continue during the housing market shutdown, they are providing consumers with more choice now restrictions are lifted.

We’re seeing the benefit of that now, as that pent-up demand of potential buyers and sellers – boosted by the stamp duty holiday – is immediately ready to react.

This year has seen some very difficult market conditions with political and economic uncertainty dominating the landscape as a result of Covid-19.

Despite all of this, I’m pleased to see the resilience of the property market. We can all look forward to the sector doing its best to contribute to the UK’s economic recovery.

Vic Darvey is the chief executive of Purplebricks

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