BoE: Mortgage approvals hit 13-year high

UK mortgage approvals have hit a 13-year high.

August saw mortgage approvals hit 84,700, which is the highest rate since October 2007. Demand has boosted thanks to the record low-interest rates and suspension of stamp duty.

New figures from the Bank of England revealed the post-lockdown demand reach new highs, however, consumer borrowing and repayments remains much lower than pre-pandemic levels.

“The mortgage market continued to show more signs of recovery in August,” it said in the report.

“On net, households borrowed an additional £3.1 billion secured on their homes, following borrowing of £2.9 billion in July. Mortgage borrowing troughed at £0.5 billion in April, and is still a little below the average of £4.2 billion in the six months to February 2020. The increase on the month reflected slightly higher gross borrowing of £18.8 billion, although it is still below the pre-Covid February level of £23.7 billion.”

“The number of mortgage approvals for house purchase continued increasing sharply in August, to 84,700 from 66,300 in July. This was the highest number of approvals since October 2007 but it only partially offsets weakness seen between March and June. In total, there have been 418,000 approvals in 2020, compared with 524,000 in the same period in 2019,” added the Bank of England’s report.

Thomas Pugh from Capital Economics said: “Despite the resurgence in the housing market, consumer credit barely rose in August.”

“And the darkening clouds on the economic horizon may tempt some households to start to rein in spending in the months ahead. Those restrictions and rising unemployment will put a further dampener on consumers’ ability to spend.”

“And the prospect of a no deal Brexit is having a chilling effect on business investment. Overall, we doubt that the economy will grow by much, if anything, over the next few months,” he added.

 

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Safiya focuses on business and political stories for UK Investor Magazine. Her interests include international development, travel and politics.