The number of mortgages taken out for residential home purchases soared by 31 per cent in December compared to the same month last year, as buyers rushed to beat the expected stamp duty increase in March.

The figures, from UK Finance, show that in the final quarter of 2020, loans for residential purchases reached their highest level for 13 years at 220,750, which was also 18 per cent higher than the same period in 2019, when there were 186,790.

In December alone there were 77,180 loans for residential purchase, an increase of almost a third from 59,100 in December 2019.

But for the year as a whole, the total number of residential purchase loans was weighed down by the closure of the housing market in Spring 2020, with volumes 12 per cent lower year on year at 611,850.

Buy-to-let investors also appeared to be rushing to take advantage of the stamp duty incentive, as loans to landlords for home purchases were up by 17 per cent to 22,500 in the final quarter of 2020 compared to the same period in 2019.

The number of residential remortgage loans plunged by 37 per cent in Q4 2020 to 70,110, compared to 111,870 in the same three months of 2019.

For the whole of 2020, the volume of remortgage loans was 21 per cent lower than 2019 at 351,750.

There was an 11 per cent increase in the number of mortgages in arrears, which reached 83,260 during 2020.

Mortgage repossessions fell by 67 per cent year on year to 2,660 during 2020 following government action to prevent home owners from being forced to leave their properties during lockdown.

Managing director of personal finance Eric Leenders says: “Homebuyers looking to take advantage of the stamp duty holiday were behind the housing market’s strongest quarter for purchases in 13 years, in the final quarter of 2020. 

“Despite this uptick in activity, annual purchases for the whole year were around a tenth lower than the previous year, due to a complete shutdown of the market in the first lockdown. 

“The stamp duty holiday helped to boost activity at the end of 2020, and it is likely many of these purchases have been brought forward in order to take advantage of the savings. 

“The chancellor’s announcement in the Budget to extend the stamp duty holiday until the end of June before then phasing it out will prevent a cliff edge, reducing the risk of house sales collapsing and will prove beneficial for all parties involved in the housing market.”

More2life chief executive Dave Harris adds: “Despite fears of another downturn, the mortgage market performed well in the final months of 2020. 

“The high buyer demand was partly caused by people’s changing priorities as they looked for homes with more homeworking and garden space. 

“However, the government’s stamp duty holiday has clearly also played a big part in enticing people to buy by offering as much as £15,000 in tax savings.

“While many initially believed the government wanted to help those further down the property ladder to move, our data has shown that the stamp duty holiday has also encouraged considerable activity among homeowners aged 55 and over.

“Indeed, the proportion of more2life customers using equity release to raise the finance for a property purchase has tripled in recent months.”