Mortgage approvals at highest level since the financial crisis

Mortgage approvals reached a 13-year high in 2020, figures from the Bank of England have revealed, as buyers took advantage of the stamp duty holiday.

Despite the closure of the housing market for almost two months during the first lockdown, there were 818,500 mortgage approvals in 2020, up from 789,100 the previous year and the largest annual total since before the financial crisis in 2007. As the markets reopened lending rose sharply after a record low of 9,400 approvals in May.

Mortgage approvals dropped to 103,400 in December, from 105,300 in November. But December’s total is still well above the norm for the festive period, indicating that buyers pressed ahead with house hunting while Christmas plans were put on hold. The figure is also much higher than pre-pandemic levels; there were 73,400 mortgage approvals in February 2020.

However, experts have warned that this level of activity is unlikely to be sustainable once the stamp duty holiday ends on 31 March. According to Laith Khalaf, financial analyst at investment platform AJ Bell: “The expiry of the stamp duty holiday at the end of March will likely take some steam out of the housing market, and many would view that as a positive thing, particularly those saving for a deposit.”

And for Samuel Tombs, chief economist at Pantheon Macroeconomics, a return to normality after the vaccine rollout will also slow down the quest to move home: “People will be content again with their pre-pandemic housing choices by the summer.”

The Bank’s data also revealed record numbers of borrowers paying back money owed, with spending options limited as a result of curbs on travel and entertainment.

Read more about this story in City AM and the Daily Mail.