Mortgage approvals dip again but amount borrowed soars

The Bank of England found buyers borrowed more as they tried to complete purchases ahead of the end of the stamp duty holiday in October.

Simon Neville
Friday 29 October 2021 10:32
The number of mortgage approvals fell in September (Andrew Matthews/PA)
The number of mortgage approvals fell in September (Andrew Matthews/PA)

The number of mortgage approvals made to home buyers fell to the lowest level this year in September, surpassing the lows set a month earlier, Bank of England figures show.

There were 72,600 approvals for house purchase, marking the lowest figure since July 2020 – the month that a temporary stamp duty holiday was put in place.

Despite the dip, approvals remain above pre-February 2020 levels, the Bank’s Money and Credit report said.

The stamp duty holiday in England and Northern Ireland was tapered from July, reducing the potential savings that could be made, and ended completely on October 1.

As a result, the amount borrowed soared to £9.5 billion – the highest level since June this year.

This was up from £4.4 billion in August with the Bank saying “the increase was driven by borrowing ahead of the complete tapering off of lower stamp duty from October”.

Naturally there was going to be more activity ahead of the end of the stamp duty holiday but with mortgage approvals falling, it will be interesting to see how the market fares over coming months

Gareth Lewis, MT Finance

Approvals for re-mortgaging rose slightly to 41,500 in September to the highest levels since March 2020.

Gareth Lewis, commercial director of property lender MT Finance, said: “These figures are relatively positive in the main, apart from the drop in mortgage approvals.

“Naturally there was going to be more activity ahead of the end of the stamp duty holiday but with mortgage approvals falling, it will be interesting to see how the market fares over coming months.

“Much will depend on how many properties come to market, which will have an impact on the number of transactions.”

Consumers also increased their spending levels on credit cards as the economy reopened following the easing of restrictions.

The Bank of England found consumers increased credit card debt by £600 million in September – the strongest net borrowing since July 2020.

Individuals also repaid £400 million in personal loans and credit – the first net repayment since February this year.

The amount being saved by households was also up, with £9.4 billion deposited with banks and building societies in September – compared to an average of £8.9 billion between April and August.

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