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Gross mortgage lending in September highest since stamp duty taper kicked in

  • 29/10/2021
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Gross mortgage lending in September highest since stamp duty taper kicked in
Gross mortgage lending hit £30.7bn in September, the highest level since June when buyers could take advantage of zero stamp duty on the first £500,000 of a property purchase.


After the 30 June deadline, tapered stamp duty relief kicked in to offer homebuyers the chance to save up to £2,500 in stamp duty until the end of September.

Last month’s mortgage lending volumes notably jumped from the £20.9bn lent in August, suggesting the last phase of the stamp duty holiday prompted the rise in borrowing. 

Gross repayments amounted to £20.7bn, up from £17.7bn in August. 

Net mortgage borrowing also rose to its highest level since June at £9.5bn. Although this was far lower than June’s record of £17.1bn, it was more than double the August figure of £4.4bn. 

Net borrowing in September was £2.9bn above the 12-month average to June 2021. 

Stuart Wilson, corporate marketing director at More 2 Life, said: “September marked a continuation of one of the busiest periods that many advisers and lenders have seen for a long time, fuelled by the stamp duty holiday.    

“Following the record highs in the summer, mortgage approvals and net mortgage borrowing have thus far remained strong, with many pushing on with their plans regardless of their ability to exchange before the tax break ended in September, due to having already incurred costs or pressing lifestyle needs.” 

Approvals for purchase mortgages dropped to 72,645 in September, down from 74,200 the month before. This was the lowest figure since July but still remained above pre-pandemic levels. 

Remortgage approvals rose to 41,528 from 39,987 in August. Compared with activity before the pandemic, the Bank of England noted that this was low. However, it noted that remortgage approvals were at their highest since March 2020. 


Average rates fall 

The effective interest rate on newly-drawn mortgages fell four basis points to 1.78 per cent in September. This was below the 1.85 per cent rate recorded in January last year and down on the series average since March 2020 which has been sat at 1.83 per cent. 

The rate on outstanding mortgages fell one basis point to a new low of 2.04 per cent.  

Mark Harris, chief executive of SPF Private Clients, said: “This is likely to be the last set of numbers from the Bank of England where the effective interest rate on new mortgages falls as several lenders, including Barclays, HSBC, Natwest and TSB, have all since raised their pricing in anticipation of a base rate rise next week.  

“With the Bank of England hinting at a rate rise, and the Chancellor in his Budget referring to an average rate of inflation of four per cent next year, all signs are that the official rate will rise for the first time since March 2020.”  

“Whether base rate rises or not, mortgage rates have started edging upwards as the markets have already priced in a rate rise, and possibly two or three more by the end of next year,” he added. 

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