Pre-virus high for mortgages

THE number of mortgage approvals made to home buyers rose to a six-year high just before coronavirus slammed the brakes on the housing market.

As buyers across the UK prepared to move house or get on the property ladder for the first time this spring, 73,546 mortgages were approved for house purchase in February.

The monthly total was significantly stronger than in recent years – and the highest since January 2014 – according to the Bank of England’s Money and Credit report.

Many of those who had been in the pipeline to move will now have to put their plans on hold for a while.

Last week, housing market experts at Zoopla warned that transactions could plunge by as much as 80 per cent during spring months this year compared with 12 months earlier.

Andrew Montlake, managing director of mortgage broker Coreco, said: “Never before has such strong mortgage approvals data rung so hollow. It feels like it came from another time.

“Within just a few weeks the property and mortgage markets have gone from strength to abject uncertainty.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said February’s figures confirm that the general election result in December 2019 did revitalise the housing market.

He said: “Admittedly, many of these proposed transactions likely will not be completed any time soon, due to Covid-19.

“Moreover, house purchase mortgage approvals likely will collapse over the coming months, now that virus-related restrictions and fears mean very few homes can be viewed.”

Lenders are offering extensions to mortgage offers which will help people who had been planning to move in the coming weeks to put their plans on ice for now and pick up at a later date.

This should help to keep housing chains glued together and stop them from completely collapsing.

The report also said that firms borrowed an extra £1.3billion from financial markets in February, but no net extra from banks.

‘Approvals are likely to collapse over the coming months’