uk house prices

Mortgage market continues at record levels as mortgage availability rises

With homebuyers and investors rushing to beat the stamp duty holiday deadline, the mortgage market sees approvals reach the highest level since 2007. 

Recently released figures from the Bank of England shows the number of mortgages approved by building societies and banks for property purchases reached 105,000 in November. This is the highest level since August 2007 and up from 97,532 in October as well. Mortgage approvals have also increased tenfold since May, when numbers hit a low of 9,400.

In November, households borrowed a whopping £5.7bn to secure on their properties. This is the highest since March 2016 and up from £4.5bn in October. Additionally, net borrowing in November was substantially higher than the average from the six months to February 2020 at £3.9m.

House purchase approvals continue at pace

During recent months, the continued strength in mortgage borrowing follows a large number of approvals for property purchases. This shows people’s strong desire to take advantage of the stamp duty holiday.

Lenders have been under pressure as the number of property sales have continued to rise in recent months. And these numbers illustrate that the sector has been working to keep up with this strong level of demand.

The rise in mortgage approvals to these record levels almost offsets the weakness seen earlier in the year at the start of the COVID-19 pandemic. Up to November 2020, there were 715,300 house purchase approvals. This is close to the number for the same period in 2019 with 722,000.

Mortgage product numbers on the rise

There has been a rise in the number of mortgage products available, particularly those for buyers with smaller deposits. This shows lenders are gaining more confidence and feeling less risk-averse moving forward.

In November, the number of mortgages with 10% deposits was at the highest level since 1st June 2020, according to Moneyfacts. First-time buyers have especially struggled to secure mortgages since the COVID-19 outbreak, but if they have at least a 10% deposit, more options are now coming to the market.

During the coming year, 95% loan-to-value (LTV) mortgages are expected to remain nearly obsolete except for first-time buyers purchasing property through the Help to Buy scheme. The lack of mortgages in this area could force some buyers to put homebuying plans on hold.

What about mortgage interest rates?

Throughout 2020, mortgage interest rates have remained competitively low, but interest rates and costs have started creeping up. In the year ahead, more lenders are expected to return to the market. And if more competition returns to the sector, interest rates could drop slightly in 2021.

Rachel Springall, finance expert at, says: “Seeking independent financial advice is still a wise move for any borrower hoping to navigate the mortgage maze. It is too early to tell what might impact the mortgage market in 2021, but there may well be a rush of applications to take advantage of the stamp duty relief.

“Lenders will have to continue to work hard to retain existing customers throughout next year and carefully assess the impact of taking on new borrowers in these challenging times.”

With lenders gaining more confidence, homebuyers and investors will continue to welcome the additional choice of mortgages on offer. While there is still a long way for mortgage availability to reach pre-coronavirus levels, it’s continuing in the right direction. And with interest rates expected to remain low, 2021 could be an effective time to secure these competitive mortgage rates.

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