Home Buying Mortgage Lending Reaches Highest Level In Years

Mortgage Lending Reaches Highest Level In Years

home valuation

The amount of mortgages being granted by UK lenders has reached its highest level in years as lenders and buyers alike take advantage of the final months of the stamp duty holiday.

In February 2021, 87,700 mortgage approvals were granted, creating a combined total value of £6.2 billion. 

Our in-house property expert, Russell Quirk, says:

“In the past few months, lending has been up sharply as buyers raced to meet the original March deadline for the stamp duty holiday.  Towards the end of 2020, mortgage approvals dipped because many buyers thought it was too late to complete a purchase in time to meet the March SDLT deadline, but now that it’s been extended, these numbers are rising once again. 

“We should expect to see even higher approval and lending numbers between now and the new June deadline. The market is going to remain bust for quite some time to come.”

Multi-dimensional demand pushing prices skyward

The stamp duty holiday is certainly playing a major part in this period of boom for UK housing, but we should also remember that the government’s new 95% mortgage initiative has also contributed to demand. 

In fact, when Rishi Sunak presented his budget review at the start of this month, Rightmove recorded its busiest day ever in terms of people searching for property and enquiring with estate agents. This budget review saw the stamp duty deadline extended and the 95% mortgage initiative announced.

However, in truth, all of these buyer-friendly government initiatives have created the most seller-friendly market in decades: demand is high and house prices are high. So, while the government has tried to help first-time buyers get onto the ladder, their moves have directly contributed to a vast surplus of demand over supply, ironically reducing the chances of first-time buyers being able to afford to enter the market.

Many experts say that the only way of bringing house prices down is to increase supply. In other words, more new homes need to be built, many of which must be classed as ‘affordable’. Every government in the past two decades has promised to build hundreds of thousands of new homes up and down the country, but none of them has been able to bring this promise to fruition. 

While Boris and his Tory party are keen to help more people become homeowners, there is a very good chance that it will slip down the priority table in the wake of Covid-19.

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