Stamp Duty Holiday still providing big boost for housing market

Mortgage approvals decreased slightly in December but remain well above pre-Covid levels thanks to the continuing incentive of the stamp duty holiday. 

The Bank of England says the strong full-year performance of the housing market - the best since 2013 - was cemented by a large number of approvals for house purchase in the second half of 2020 in particular.

In December mortgage approvals totalled 103,381, slightly lower than 105,300 approvals in November, but well above the February 2020 low-point of 73,400.

The BoE says net mortgage borrowing remains strong at £5.6 billion in December, down only very slightly from £5.7 billion in November.

David Ross, managing director of Hometrack, says: “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.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, adds: “While these figures are always a good indicator of direction of travel for the market, we won’t be getting carried away, not least because the year’s low for these approvals appeared a couple of months after the first lockdown. Similarly, the change in market conditions we are seeing on the ground now will not be seen in the numbers for another month or two at least.

“Looking forward, we don’t anticipate any drastic change in prices, which will continue to be supported by shortage of stock and perhaps more first-time buyers taking advantage of a levelled playing field once investors lose their market advantage after the stamp duty concession ends.”