"When you consider that the housing market was effectively closed for two months in 2020, it is quite amazing to see that we ended the year with more approvals than overall in 2019."
The data shows that the recent strength in approvals has more than offset the significant weakness earlier in the year. House purchase approvals – having troughed at a record low of 9,400 in May – totaled 818,500 in 2020, the largest number in one year since 2007.
In December, the number of approvals was 103,400. This was slightly lower than in November (105,300) but well above the February level (73,400).
Approvals for remortgaging with a different lender fell slightly in December to 33,800, and remain around 35% lower than in February (52,400). Remortgage approvals in 2020 (451,400) were lower than in 2019 (587,600).
Net borrowing continued to be significantly higher than the average of £3.9 billion seen in the six months to February 2020. Strength since September in net mortgage borrowing has, however, only partially offset weakness earlier in the year: total borrowing in 2020 (£43.3 billion) was below 2019 (£48.1 billion).
Richard Pike, sales and marketing director at Phoebus Software, commented: “When you consider that the housing market was effectively closed for two months in 2020, it is quite amazing to see that we ended the year with more approvals than overall in 2019. To say it has been a roller-coaster is something of an understatement, given the effect the pandemic has had across the world. However, the overall effect on the housing market, despite the buoyant figures, is one that some will be feeling is not necessarily for the better.
“The increased demand has pushed prices up and first-time-buyers are again feeling the brunt. With the average deposit needed now over £10,000 more than it was a year ago, according to research by Halifax, getting onto the property ladder is becoming harder again. The need for higher LTV lending is obvious although, for lenders, the ongoing economic impact and the risk of rising unemployment is a concern for long term affordability.”
David Ross, managing director of Hometrack, added: “The market did experience its typical seasonal slowdown but we are still seeing strong growth in mortgage applications as buyers rush to beat the stamp duty deadline. While demand is strong average interest rates are ticking up, reflecting sustained demand for higher loan to value mortgages.
"These continued improvements, while welcome, are incremental and cautious. It remains to be seen whether these will be enough to weather the impact of covid on the economy in the months to come.”
