In August 2020, UK mortgage approval rates rose to their highest level in 13 years with many pointing to government intervention as the key driver for the increase.
August is usually one of the quietest months in the UK housing market but, this year, the script has been rewritten due to the effects of the Covid-19 pandemic and the government’s subsequent efforts to keep the market alive.
While July 2020 saw 66,300 mortgage approvals, in August, this number jumped to 84,700 and the main reasons for this are being quoted as incredibly low borrowing rates and the governments well-publicised stamp duty holiday which is set to end in March 2021.
This rise is good news for the UK property market which, back in May 2020, saw mortgage approval rates hit their lowest point since the early 90s. However, due to market instability since lockdown began in March, total mortgage approvals for 2020 are still down compared to the same period last year.
2020 has, so far, seen 418,000 mortgage approvals while by this time last year, there had been 524,000.
Despite this, it is still possible that approval rates in 2020 will eventually trump those of 2019. The Covid-19 pandemic and subsequent lockdown have already pushed a lot of people to look for more spacious living arrangements, and also resulted in an unprecedented escape from urban areas into the greener pastures of the countryside. If this continues, the 2020 housing market could be very busy indeed.
If you are thinking about selling your home, do it now!
Our property expert, Russell Quirk, offers the following advice for buyers and sellers following this surprise announcement:
“This is an astonishing rise in mortgage approvals that, for now, illustrates a stronger buy-side property market than any time since the financial crisis of 2008.
“In that vein, it remains to be seen how approvals and the overall market will fare in a ‘post-stamp duty holiday’ environment come April 2021 and, therefore, my recommendation is that, if you are thinking about selling your home, do it now!
“Buyers are suitably fuelled by the promise of saving up to £15,000 in stamp duty, but we could see the tank rather more empty come Spring, when it’s possible that values will correct themselves, even just temporarily.”
If you’ve got a question for Russell, or want to share your recent mortgage experience, let us know in the comments section below and we’ll get back to you.