There were 124,520 homeowner purchases in June, the highest monthly figure witnessed since comparable records began in 2005, says UK Finance in its review for Q2 2021.
“In this regard, the stamp duty land tax concession has been a success,” the report states, noting that both demand, as well as purchase activity, has increased to new highs.
Overall, Q2 2021 had the highest levels of homeowner purchase activity since Q3 2007. UK Finance comments it is “unlikely that this level of lending will be sustained in the medium to long term.”
It adds that while borrowers moving to bigger homes has been one story, of particular significance is the action of buy-to-let landlords, who completed the largest monthly volume of purchases since 2016.
On a regional level, UK Finance also points out that in London there was a 300% rise in homemover purchase volumes compared to Q2 2020.
“It is important to note that house purchase levels in the first two quarters of 2021, across the regions and nations, have either returned to, or are significantly higher than, levels prior to the pandemic,” says the report.
It also warns that although early households in mortgage arrears declined in the second quarter of this year, those in later arrears – 10% or more of their total outstanding mortgage balance – have gone up, which could be a sign of things to come across all arrears categories as various schemes wind down.
UK Finance managing director of personal finance Eric Leenders says: “With the holiday now in its final tapering phase, demand was expected to decline.
“However, applications towards the end of the quarter and into Q3 remain higher than before the pandemic began, as we continue to witness the ‘race for space’”.
Phoebus Software sales and marketing director Richard Pike adds: “As we return to some sort of normality we have to ask ourselves what the future looks like for the housing market.
“Although arrears are still low, the truth is that we have no idea how many people will be returning to work after furlough comes to an end.
“Worst case scenario says that lenders should be prepared to see more people coming into difficulty and have plans in place to help those that are struggling. There is a lot of recruitment activity in the collections space which reflects this.
“The amount of money that people managed to save during lockdown may provide a cushion, however, while the return to work gathers pace and people discover their long-term employment status.
“There is still plenty of activity at the moment and the economic outlook is better than we could have expected, so we wait to see whether the same will prove to be true for the housing market.”
