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Mortgage approvals rebound in June – BoE

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  • 29/07/2020
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Mortgage approvals rebound in June – BoE
The number of house purchase approvals jumped to 40,010 in June up from a record low of 9,273 in May, the Bank of England’s (BoE) Money and Credit statistics show.

 

Despite the strong rebound, this was still 46 per cent below February’s pre-Covid level of 73,700. 

The value of house purchase approvals in June reached £8.3bn. 

Remortgage approvals grew to 36,926 this month up from May’s 30,728. The value of remortgage approvals totaled £1.7bn in June. 

Net borrowing to households reached £1.9m in June, higher than £1.3bn in May, but still weaker than the £4.1bn average seen in the six months to February. The increase represented both new borrowing and lower repayments. 

 

Not quite a recovery 

Mark Harris, chief executive of SPF Private Clients, said: “The Bank of England figures show there is still some way to go. Approvals picked up but were still below pre-Covid levels as lenders tried to deal with mortgage payment deferrals, staff working from home and clearing the backlog of valuations.  

However, these figures are quite historic now and we have seen a good amount of business this month as borrowers look to move for more space or to remortgage onto some of the competitive deals that are available. 

Jeremy Leaf, north London estate agent and a former RICS residential chairman, addedAs always, these numbers are a useful pointer for direction of travel of the housing market in the coming months and reflect what we have been seeing.  

Looking forward, we are a little nervous about prospects for the market once government support eases as many businesses will then have to make big decisions about whether to keep staff on, which will of course have a knock-on effect on buyer confidence. 

Hugh Wade-Jones, managing director of Enness Global Mortgages, added that the figures were lower than “normal” expectations but noted the market was yet to benefit from the stamp duty holiday.  

 

Risk of rejection 

Sam Harhat, head of financial services at Andrews Property Group, said purchase activity had been driven by pent-up demand but there was still a disconnect between what borrowers believed they can get from lenders and what lenders are prepared to offer. 

He said: “Some of the demand we’re seeing right now is based on pre-Covid-19 expectations rather than the new reality.  

As a result, even if certain borrowers think they can proceed, often they cannot. 

David Ross, managing director of Hometrackadded to this, by saying the volatile market could see many shut out from gaining any advantage. 

Many of these applications run the risk, however, of being unsuccessful, denying potential homeowners the twin benefits of no stamp duty and low interest rates, and in turn stifling the positive network effects of homemoving on the economy, he said. 

 

Advisers needed 

Ross Counsell, chartered surveyor and director at Good Move, said it was important to remember times are still uncertain and buyers may experience challenges when making applications 

Going forward advisers must be on hand to help buyers secure the best possible mortgage to help protect their finances going forward, he added. 

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