End of stamp duty holiday leads to drop in mortgage approvals

Mortgage approvals declined slightly in January as the market braces itself for the end of the stamp duty holiday - currently scheduled for March 31 but strongly expected to last until June. 

Figures from the Bank of England show 99,000 mortgage approvals for house purchases in January, down from 102,800 in December, but slightly above some market forecasts.

The amount borrowed in January was £5.6 billion. The monthly average for mortgage borrowing in the pre-pandemic six months to February 2020 was £4 billion and the average number of approvals in that period was 67,900.

Responding to the figures Jeremy Leaf, the north London estate agent and former RICS residential chairman, says: “The numbers demonstrate continuing resilience as the overwhelming majority of buyers and sellers determine to press ahead with their moves and take advantage of the stamp duty concession which at the time they believed would end in March.

“Since then, the landscape has changed and further pandemic restrictions and political pressure have meant the stamp duty holiday is likely to be extended. Looking forward, we don’t expect much to change other than a dip in transactions in the second quarter. 

“The good news is that the government is increasingly recognising the importance of maintaining a good level of housing transactions and their positive impact on job and social mobility as well as the wider economy.”

And David Whittaker, chief executive of Keystone Property Finance, says: “The housing market remained resilient as the new year kicked off, with demand for property continuing to rise as people take advantage of low interest rates and the stamp duty holiday. However, it’s clear that mortgage transactions are beginning to slow as the impact of the third national lockdown on consumer confidence and uncertainty about the future of the stamp duty holiday takes hold.

“In addition, while demand for property has remained strong, data shows that the supply of new property has decreased since the beginning of the year. As well as navigating this unprecedented market, buy-to-let borrowers have an added challenge of dealing with recent and upcoming regulatory changes.”