![A 13-Year High for Mortgage Approvals](https://www.propertyforum.com/wp-content/uploads/2021/01/shutterstock_1069985231-scaled.jpg)
The rush to complete a property sale in time to benefit from the stamp duty holiday rocketed throughout October. Mortgage approvals reached a 13-year high, with just short of 100,000 home loans approved in October.
A total of 97,500 loans were applied for as buyers continued to take advantage of the Government’s stamp duty holiday (Bank of England), reaching its end on 31st March 2021.
The approval of home loans reached their highest level since October 2007. The increase began due to the coronavirus pandemic and saw loan approvals increasing steadily from 84,700 in August to 91,500 in September.
The October figure was a third higher than it was back in February before the COVID-19 lockdowns began. This dramatic increase shows just how much the coronavirus pandemic has influenced the UK property market, with more people looking to move house than ever before.
With mortgage approvals hitting a record just short of 100,000 in October, this is ten times higher than the lowest point back in May.
This record comes as the latest House Price Index figures have shown its highest levels since December 2017, with the increase in buyer demand inflating property price up by a 3.5% growth. Following this trend, house price inflation is, therefore, expected to hit 4% by the end of 2020.
But, why is this surge happening? The sudden increase in house purchases can be attributed to a number of different factors.
Firstly, there is an incentive from the government’s stamp duty holiday on homes up to the price of £500,000, offering a potential £15,000 tax break. Since the end date is looming, with the stamp duty holiday expected to cease on 31st March, a mini-boom has been triggered as many hurry to take advantage of the tax savings.
In addition to the financial motivations, the coronavirus lockdown earlier in the year has sparked a ‘once-in-a-lifetime’ reassessment of people’s homes. From spending week after week ‘staying-in’ to reduce the spread of the virus, many homeowners ended up looking at their surroundings through different eyes. Moreover, as many people were encouraged to work from home to reduce their contact with others, they have begun to need more space for a home office, as well as wishing for larger gardens and outside space to act as an extension to their home.
Compared to recent years, this desire to find another property that offers more space and freedom during lockdown has helped reverse one of the major blockages in the property market.
Before the pandemic, the property market was stuck in a vicious cycle of stagnation; existing homeowners were put off listing their current homes due to the lack of choice when searching for their next purchase.
However, with the new financial incentive from the stamp duty holiday, the property market has seen an increase in both buyers and sellers which means there are plenty of available choices for everyone.
After the initial increase, the property market was expected to remain strong for the summer months but begin to slow down towards the end of the year. But, the market has taken another route. The property sales pipeline is currently 50% larger than this time last year. A total of 1.1 million homes are expected to change hands before the end of 2020. This figure is only 6% lower than those from 2019, regardless of all the disruption caused by the COVID-19 pandemic.
Looking towards the new year, experts are predicting a possible spike in January; however, the outlook beyond then is at present quite uncertain. When the end of the stamp duty holiday is considered in relation to the pandemic’s economical impact, its effects on rising unemployment and business closures, how the property market will fair in 2021 is very difficult to forecast.