In its household spending review, UK Finance said the estimate of lost activity was based on the stable pre-Covid trend forecast for 2020, which was largely flat compared to the previous year’s activity.
House purchase lending recovered strongly in the third quarter of 2020 from its Q2 collapse.
In Q3, the total number of purchase applications completed was 154,700 with an almost even split between first-time buyer and home mover transactions. This was an increase of 76 per cent on activity in Q2 when 88,090 purchase applications completed; 46,440 for first-time buyers and 41,650 for home movers.
Year on year, the Q3 volume of purchase loans was 17 per cent lower. In quarter three 2019, a total of 188,230 purchase loans completed; 93,930 for first-time buyers and 94,300 for home movers.
Q4 growth expected
UK Finance said it was important to bear in mind that any “return to trend” observations made by the market, regardless of the Q3 rebound, would still leave total house purchase activity for the first nine months of 2020 nearly a quarter lower than over the same period in 2019.
That said, UK Finance expects a return to annual growth in completed mortgages in quarter four.
The growth, said the trade body, would be driven by the backlog of paused transactions continuing to unwind and a rush to cash in on the stamp duty holiday and Help to Buy scheme before both close at the end of March.
Eric Leenders (pictured), managing director for personal finance at UK Finance, said: “In the third quarter of 2020 the economic and logistical impacts of lockdown receded somewhat, facilitating a strong rebound in the housing market, yet recent further regional lockdowns and tighter restrictions may dampen this to some extent.
“As the stamp duty holiday and current Help-to-buy schemes come to a close at the end of Q1 2021, demand for mortgages is likely to be inflated over the next couple of months – beyond that the outlook is uncertain.”