The Bank of England has reported that the UK mortgage market strengthened in November 2020.
In its latest Money and Credit report, the Bank revealed that households borrowed an additional £5.7 billion secured on their homes, following net borrowing of £4.5 billion in October. November borrowing was the highest since March 2016, and significantly higher than the average of £3.9 billion seen in the six months to February 2020.
The report stated that recent strength in net mortgage borrowing has, however, only partially offset weakness earlier in the year: total borrowing in the year to November (£37.6 billion) was below the equivalent in 2019 (£44.0 billion).
The continued strength in mortgage borrowing follows a large number of approvals for house purchase over recent months. In November, the number of these approvals – an indicator for future lending – continued increasing, to 105,000 from 98,300 in October. This was the highest number of approvals since August 2007 and recent strength in approvals has almost fully offset the significant weakness earlier in the year.
There were 715,300 house purchase approvals up to November 2020, close to the number during the same period in 2019 (722,000). Approvals for remortgage (which only capture remortgaging with a different lender) rose slightly in November to 35,100, but remain around 33% lower than in February 2020.
David Ross, managing director of Hometrack, said: “Mortgage approvals in November were the highest since 2007 and the UK housing market has enjoyed its busiest Christmas in over 10 years. While the economic impact of Covid has yet to be felt, news of the vaccine roll out, combined with the UK agreeing a deal on Brexit and the extension of furlough, should help maintain confidence in the market.
Lenders are acting responsibly in the current buoyant market, closely monitoring the economy before making decisions in anticipation of changes in demand from homeovers and the prudent supply of mortgages.”