Data from the Bank of England showed that 84,715 mortgages were approved for a property purchase last month, up from 66,288 in July and the highest total since October 2007 when 86,010 purchase applications were granted.
However, the number of remortgage applications approved slid back towards the low point in May, hitting just 33,390, meaning overall approvals were 129,424 – on par with the typical monthly numbers last year, including August 2019.
The Bank of England also noted that the spike in purchases “only partially offsets weakness seen between March and June”.
In total, there have been 418,000 approvals in 2020, compared with 524,000 in the same period in 2019 – down 20 per cent.
The value of new lending completed continued its steady recovery to reach £18.8bn – up £1bn or six per cent from the July total of £17.7bn.
This is still someway from the pre-Covid high of £23bn in February and March, but shows progress from the low of £14.9bn hit in April.
Where mortgage interest rates were concerned, the effective rates on new and outstanding mortgages were little changed in August, according to the central bank.
New mortgage rates were 1.72 per cent, a decrease of one basis point on the month, while the interest rate on the stock of mortgage loans also fell one basis point to 2.14 per cent in August.
Long-term pent-up demand
Gareth Lewis, commercial director of property lender MT Finance, noted the impressive pick up in mortgage approvals was to be expected.
“If we go all the way back to Brexit, there has long been pent-up demand and people waiting to move, Covid then hit and people were still waiting,” he said.
“Now, there are so many for sale, as well as sold signs, illustrating that there is confidence and a willingness to invest in property.
“Consumer credit has bounced back and stabilised, which is encouraging as it shows people are not over-stretching themselves by increasing debt and getting into financial difficulty. People are maintaining a grasp of reality.”
Jonathan Harris, managing director of mortgage broker Forensic Property Finance agreed.
“The market has been buzzing during what is usually a quiet, holiday month, as buyers free from lockdown restrictions got on with moves to the country and took advantage of the stamp duty holiday while they can,” he said.
“Lenders have sometimes struggled to cope with the sheer volume of applications and service levels have not always been what we would expect so borrowers must leave longer for transactions to complete.”