That’s according to the latest Money & Credit report released by the Bank of England, which found that approvals were roughly ten times the level seen back in May, at the height of the lockdown.
There is a significant contrast with remortgage cases, where approvals dropped to 32,700, slightly down on August and 38% lower than in February this year.
Net mortgage borrowing for the month increased to £4.8 billion, from the £3 billion registered in August. Effective mortgage interest rates were broadly unchanged over the month compared to August.
John Philips, national operations director at Just Mortgages and Spicerhaart, said that the housing market reached “boiling point” in September after heating up over the summer, but warned that the market may be set to cool as a result of the Stamp Duty holiday deadline looming on the horizon.
He continued: “To keep the market cooking, now is the time for lenders to loosen their criteria. Particularly for higher LTV mortgages to allow first-time buyers to access the market. We are still seeing thousands of eligible borrowers being turned away as, despite stable income and proof they can pay credit reliably, they don’t have the 15% deposit required to purchase their own home.”
Tomer Aboody, director of MT Finance, said that it was no surprise that the high approval levels were leading to a corresponding rise in property prices.
He added: “The feeling and concern is that buyers are feeding into an artificially strong market, which has been driven by historically low mortgage rates and a rush to complete transactions before the end of the Stamp Duty holiday in March.”
Andrew Montlake, managing director of Coreco, suggested that it was “common knowledge that the post-lockdown bull run” was already over, noting that lenders have been “putting down the shutters” of late.
“What’s crucial is that the major lenders don’t go too far and start pulling products for more robust borrowers with larger deposits. As surreal as 2020 has been, the onus is on lenders to keep it real as we enter the winter months. There are still many landlords and owner-occupiers with equity and decent incomes, who are perfectly viable borrowers, and the banks shouldn’t forget this,” he concluded.
