A mini-boom in the HOUSING market has lifted the number of mortgage approvals to a new 13-year high.
This suggests that the current holiday of stamp duty and the pressure to move to larger properties since lockdown began is fueling demand for those looking to move or climb the property ladder.
Figures from the Bank of England and real estate agents have shown that there is now a ratio of 13 potential buyers to each available property after the number of home hunters increased.
The number of home purchase mortgage approvals rose further to 91,500 through September, up from 85,500 in August, according to the Bank of England’s money and credit report.
This was the highest number of approvals since September 2007 and 24 percent higher than the approvals in February this year.
However, the bank’s rescheduling approvals numbers, which only record rescheduling at another lender, show a slight decrease from August’s 32,700, 38 percent less than February this year.
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Howard Archer, EY ITEM Club’s chief financial advisor, said: “The 13-year high for mortgage approvals in September is clear evidence of the significant pickup in property market activity since the release of pent-up demand from the easing of restrictions in mid-May .
“This boost was reinforced by the Chancellor, who raised the stamp duty threshold to £ 500,000 from mid-July to March 31, 2021.”
The numbers came out when the National Association of Estate Agents (NAEA) real estate association announced that the number of potential home buyers hit a 16-year high in September.
The number of potential buyers registered per real estate agent branch has increased by a third compared to the previous month.
This was the highest number of house hunters since June 2004.
As a sign that lenders are tightening their low-deposit mortgages, the numbers also show that the share of sales to first-time buyers was 19% in September – the lowest amount since March 2013.
Many low deposit mortgages have disappeared from the market during the coronavirus pandemic amid concerns about job insecurity and the potential drop in property prices, which could leave some homeowners with negative equity.
In some better news for first-time buyers, Lloyds Bank reintroduced its Lend a Hand mortgage on Thursday.
It is designed to help those struggling with a security deposit by allowing them to borrow up to 100 percent of a mortgage with family support.
The Lend a Hand mortgage has a three-year fixed rate of 3.25%.
It comes after a new mortgage deal was announced designed to help first-time buyers onto the real estate ladder that allows up to six family members or friends to apply for a loan.
Generation Home start-up lender’s Home Booster Mortgage allows multiple people to apply for the same mortgage to increase the loan amount.
The idea is that this will either help groups of friends who want to live together or first time buyers who are struggling to get a large enough mortgage on their own.
Instead of making a deposit, a family member raises 10% of the purchase price as collateral on a linked savings account that earns interest. The savings and interest are released after three years provided all mortgage payments have been met.
Mark Hayward, Managing Director of NAEA Vorteilymark, said, “The pressure to close sales before the stamp duty vacation deadline means we’ve seen a huge surge in buyers and sellers – with an average of 13 buyers per available property.
“This boom has had a very positive effect on the real estate market.
“However, given the stamp duty cliffs on March 31, we urge the government to reconsider these times as the pressure on service providers in the industry increases, causing delays for buyers and sellers.
“Failure to find a solution to the cliffs, be it tapering or lengthening, could result in thousands of sales falling at the final hurdle and impacting the property market, which has rebounded well from the Covid slump. ”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said borrowers need to consider how long it is likely to take an application to process.
He said, “Price and criteria are critical to choosing a mortgage, but you also need to consider how long it will take. There is no point in getting a mortgage from a lender who is six months in arrears when you have to exchange in four weeks. ”
Jeremy Leaf, a north London real estate agent and former chairman of the Royal Institution of Chartered Surveyors, said, “Unless buyers suddenly change course and cancel mortgage offers, most of them will likely become transactions. Once again the market is proving its resilience. ”
However, Andrew Montlake, chief executive of mortgage broker Coreco, said that while the latest numbers are welcome, “the bull run is over after the lockdown”.
He added: “It is crucial that the big lenders
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