This is according to the latest data from the Bank of England which revealed there were 818,500 approvals in 2020, compared to 789,100 the year before.

What’s more net mortgage borrowing ‘remained strong’ at £5.6 billion in December, with effective interest rates on new borrowing increasing to 1.90% – the highest since October 2019, the Money and Credit report for December 2020 revealed.

However, the strength of net borrowing only partially offset weakness earlier in the year, with total borrowing in 2020 coming in at £43.3 billion compared to 2019’s £48.1 billion, the BoE said

Approvals in December, the BoE said, were also slightly down on the November figures – indeed, they were at 103,400 at the end of the year, compared to November’s 105,300.

However, this was well above the February 2020 level of 73,400 and the BoE said the numbers over the year had more than offset the weakness during the housing market closure earlier in the year.

Yorkshire Building Society’s strategic economist, Nitesh Patel, described 2020 as a ‘year of two halves’. He said: “[There was] an active market prior to the lockdown, which came to hard stop in March. When the market reopened last summer, the rapid uplift in activity took many by surprise.

“The market has been stimulated partly by buyers re-evaluating their housing needs, particularly for larger home with access to green space, but Stamp Duty relief, which has potentially helped buyers make significant savings on their purchases, has been the biggest driver in housing activity.

“When the scheme ends on 31 March, we expect activity to slow to more normal levels.”

Patel, like many, was concerned of the risk to many would-be buyers whose sales were agreed but could not complete in time to benefit from the stamp duty relief.

“This could potentially cause many sales to fall through,” he warned. “We would ask the chancellor to re-consider the deadline and a introduce a three-month tapering off period, which would give purchasers with agreed sales and mortgages approvals, extra time to complete their sale and still benefit from the tax relief.

“An active housing market is vital for the economy and it also boosts consumer spending which the economy will need as restrictions are lifted.”

Higher LTV lending

Richard Pike, sales and marketing director of Phoebus Software, said describing 2020 as a rollercoaster would be something of an understatement and he was concerned how the impact of the mini boom would impact those with smaller deposits.

“The increased demand has pushed prices up and first-time-buyers are again feeling the brunt,” he added.

“With the average deposit needed now over £10,000 more than it was a year ago, according to research by Halifax, getting onto the property ladder is becoming harder again.

“The need for higher LTV lending is obvious although, for lenders, the ongoing economic impact and the risk of rising unemployment is a concern for long term affordability.”