Mortgage approval totals for house purchases rose again in October after spiking in September, rising from 92,000 to 97,500, show Bank of England figures.
This, it says, is the highest number counted since 2007 and is 33 per cent higher than the figure seen in February of this year.
October’s purchase approvals equaled £20.6bn in value compared to £19.5bn in September.
Remortgage approval figures, meanwhile, were steady, rising from 32,800 in September to 32,900 in October – but were still 40 per cent lower than seen in February 2020.
The value of remortgage approvals decreased slightly from September to October, moving from £6.2bn to £6.1bn.
Households borrowed an additional £4.3bn in October compared to £4.9bn in September, the BoE adds.
It also says that the interest rate paid on newly drawn mortgages rose from 1.74 per cent to 1.78 per cent on a monthly basis in October, which is still below the level seen in January this year – 1.85 per cent.
Coreco managing director Andrew Montlake says: “For mortgage approvals to be the highest since September 2007, the month when people queued outside Northern Rock and the Global Financial Crisis symbolically began, shows the sheer extent of the pent-up demand caused by the first national lockdown.
“This data is bittersweet, of course, as we all know that 2021 could see the real economic impact of the pandemic start to bite. It’s hard to celebrate such robust mortgage approvals data when we all know what’s round the corner.
“Unsurprisingly, lenders are circling the wagons due to concerns over rising unemployment levels and their impact on house price growth. Getting a mortgage at higher loan to values remains an almost insurmountable challenge.
“What’s vital is that lenders don’t become overly cautious and stop lending to borrowers with larger deposits. With a vaccine looming, lenders will hopefully avoid entering panic mode.
“There are still many landlords and owner-occupiers with equity and decent incomes, who are perfectly viable borrowers, and the banks shouldn’t forget this.”
Phoebus Software sales and marketing director Richard Pike adds: “It is not only the stamp duty saving that is driving the market but there is also the number of people looking to escape city life since the lockdown. And, as the ‘working from home’ culture continues this is likely to endure past the limitations imposed by Covid-19.
“The problem then will be the age-old one of supply and demand. Despite the government’s promises, we are, according to the ONS last week, way behind our target for new housebuilding in the last year.
“With the knock-on effect of the pandemic, this is something that isn’t going to be fixed quickly. So, the mass exodus from our cities that has been predicted, could turn into a trickle come the spring.”
Original Article from Mortgage Strategy 30/11/2020