UK mortgage approvals reach 13-year high

Lenders in the UK approved more than 100,000 new mortgages in November, the most since the start of the financial crisis in August 2007, according to the Bank of England.

The housing market collapsed early in the Covid-19 pandemic in April and May when lockdown restrictions were first imposed. Home buying has increased since then, driven in part by a stamp duty holiday — cutting the rate to 0% for all properties under £500,000 — which is due to expire at the end of March.

Data from the Bank of England shows that lenders approved 104,969 mortgages in November, despite England being in a national lockdown for most of the month. Approvals rose from 98,338 in October.

It comes after building society Nationwide reported last week that house prices in December were up 7.3%, their biggest annual increase in six years.

The activity in the housing market contrasts with many other parts of the UK economy which are struggling to recover.

“The good news is that the banks are increasingly eager to lend and we have started to see major institutions return to lending to buyers with small deposits, in a boost for first time buyers,” said Hina Bhudia, a partner at Knight Frank Finance, quoted by BBC News.

“The bad news is that many banks still haven’t worked through a backlog of applications that built up during the lockdown and subsequent surge in activity during 2020, and will likely struggle to cope if activity picks up during the first months of this year.”