Coronavirus: Mortgage approvals bounce back to highest level since 2007

29 September 2020, 10:19 | Updated: 29 September 2020, 10:35

Mortgage approvals rose to their highest level for nearly 13 years last month in the latest sign of a post-lockdown recovery in the housing market.

The number of home loans signed off rose to 84,715, up from 66,288 the month before, according to latest Bank of England figures.

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That took mortgage approvals back above pre-pandemic February levels for the first time and was the highest number since October 2007.

The Bank of England said it showed "more signs of recovery" for the mortgage market but that it only "partially offsets" weakness between March and June - a period which saw approvals sink to record lows.

In total, there have been 418,000 approvals in 2020, compared with 524,000 in the same period in 2019.

Thomas Pugh, UK economist at Capital Economics, said the "mini-boom" in the housing market was due to pent-up demand and the government's stamp duty holiday.

But Mr Pugh also pointed to sluggish data on consumer credit - covering the likes of credit cards and car finance - within the BoE data.

Consumer borrowing, which is seen as a key driver of economic growth, increased by just £300m in August, having increased by £1.1bn in July.

That followed four straight months from March to June when households had been net paying back loans.

Mr Pugh said: "Darkening clouds on the economic horizon may tempt some households to start to rein in spending in the months ahead.

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"These figures suggest that the recovery was already starting to slow in August, before the latest restrictions were announced.

"Those restrictions and rising unemployment will put a further dampener on consumers ability to spend."