The UK mortgage market continued to strengthen in November 2020, with the latest Bank of England data showing a significant increase in both mortgage borrowing and approvals for house purchases.
Households borrowed an additional £5.7B secured against their homes during the month, up from £4.5B in October. This marked the highest level of monthly net mortgage borrowing since March 2016 and was significantly above the average seen in the six months before the Covid-19 pandemic.
Mortgage approvals for house purchases also continued to rise, reaching 105,000 in November, compared with 98,300 in October. It was the highest monthly number of approvals since August 2007 and highlighted the continued strength of buyer demand following the reopening of the property market.
The increase in approvals had almost fully offset the significant decline seen earlier in 2020. By the end of November, there had been 715,300 approvals for house purchases during the year, close to the 722,000 recorded over the same period in 2019.
Demand was supported by a combination of low mortgage rates, changing buyer priorities and the approaching deadline for the Stamp Duty Holiday. While the effective interest rate on newly drawn mortgages rose slightly to 1.83% in November, borrowing costs remained historically low for many buyers able to secure finance.
Group CEO of Enness Global Mortgages, Islay Robinson, commented:
“While many of us will have had a somewhat muted festive period, this certainly hasn’t been the case where the UK property market is concerned, with the latest figures showing the highest level of monthly mortgage approvals since August 2007.”
“This leading indicator of buyer appetite has been on an upward trajectory since May and demonstrates the huge influx of market activity seen since the market reopened. So although 2020 ended with a whimper, the market shows no signs of slowing just yet and this huge degree of momentum is certain to carry through to this year.”
“Of course, the fast approaching stamp duty deadline will dampen buyer demand to some extent. However, the availability of record low mortgage rates for those in a position to secure them should ensure demand remains robust beyond March, bringing long-term benefit to the market as a whole.”
