Mortgage approvals nearly back to pre-virus numbers
THE number of mortgage approvals last month was at its highest since February in an ‘astonishing’ recovery for the market.
Successful applications jumped from 40,000 in June to more than 66,000 in July. The figure is now more than seven times higher than in May, Bank of England data shows.
Mortgage approvals have grown from a low of 9,300 in May to 66,300 in July – just 10 per cent shy of pre-lockdown levels.
It means the market has almost recovered to its pre-Covid state in two months.
Experts said sales were likely to be ‘turbocharged’ by the Chancellor’s stamp duty holiday, but warned the end of the furlough scheme could stifle demand.
The housing market roared back to life after it was reopened in May following a seven-week ban on home moves.
Hugh Wade- Jones, managing director of Enness Global Mortgages, said the recovery was ‘astonishing given the dire position of the market just a few short months ago’.
He added: ‘There is no doubt that the huge surge of buyer demand seen once the market reopened has been seriously turbocharged due to the stamp duty holiday announced shortly after.
‘As a result, we’ve seen the number of people approved for a mortgage rebound from the depths of pandemic paralysis in May to hit almost the same levels as this time last year in just two months, with the current trajectory sure to return the market to prelockdown levels in no time.’
Gareth Lewis, commercial director of property lender MT Finance, said the figures could be better still.
He added: ‘Lenders still have staff furloughed or working from home, and it is taking them too long to process applications.
‘This isn’t going to change for a while yet as they don’t have the capacity to bring everyone back to the office.’
Experts have warned the recovery could be hampered as cautious lenders restrict credit ahead of an anticipated jump in unemployment.
Borrowers with small deposits have found it particularly difficult to get loans as banks have been pulling deals and increasing rates across the board.
Sam Harhat, head of financial services at Andrews Property Group, said the property and mortgage markets appear to be ‘operating in two entirely different realities’.
He added: ‘The demand for property is exceptionally strong, a result of pent-up demand, the low cost of borrowing and the stamp duty holiday, while the availability of mortgage finance has been contracting by the day.’
Last month, the Daily Mail reported that some buyers face losing their dream home because lenders are increasing interest rates and axing deals at the last minute as they struggle to cope with the tide of applications.
Others are having to wait eight weeks for a mortgage offer that would have taken two to three weeks in pre-Covid times.