Huge surge in mortgage approvals in July shows V-shaped recovery for housing market

MORTGAGE approvals surged in July following coronavirus lockdown, showing a V-shaped recovery for the housing market.

The number of mortgages accepted for new house purchases jumped to 66,300 in July, up from under 39,900 in June.

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It's also almost seven times higher than the coronavirus low of roughly 9,000 approvals in May, according to new data by the Bank of England.

The figures are the highest since February this year and just 616 fewer than in July last year.

If you get approved for a mortgage, your lender has typically checked your individual circumstances including your credit history and decided that you'd be a good candidate.

The new figures are good news as the property market came to a near standstill earlier this year due to the coronavirus crisis.

What help is out there for first-time buyers?

GETTING on the property ladder can feel like a daunting task but there are schemes out there to help first-time buyers have their own home.

Help to Buy Isa – It's a tax-free savings account where for every £200 you save, the Government will add an extra £50. But there's a maximum limit of £3,000 which is paid to your solicitor when you move. These accounts have now closed to new applicants but those who already hold one have until November 2029 to use it.

Help to Buy equity loan – The Government will lend you up to 20% of the home's value – or 40% in London – after you've put down a 5% deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.

Lifetime Isa – This is another Government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards their first home. You can save up to £4,000 a year and the Government will add 25% on top.

Shared ownership – Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25% to 75% of the property but you're restricted to specific ones.

"First dibs" in London – London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.

Starter Home Initiative – A Government scheme that will see 200,000 new-build homes in England sold to first-time buyers with a 20% discount by 2020. To receive updates on the progress of these homes you can register your interest on the Starter Homes website.

Social distancing impacted people being able to view properties in person and estate agents being able to conduct valuations.

Mortgage approvals rose as lockdown restrictions eased and the government scrapped stamp duty on properties worth up to £500,000 on July 8 until next March.

It means August's mortgage approval figures are likely to be even higher, as the stamp duty holiday properly starts to filter through to the figures.

Although first-time buyers may not contact lenders as a first thought, mortgage approvals are generally considered an indicator of how the property market will perform in the coming months.

Furloughed workers trying to get on the property ladder may struggle to get a mortgage though, as TSB recently listed salaries as £1.

Meanwhile, first-time buyer mortgages with a 10% deposit have made a comeback – but not if you want to buy a flat.

In the beginning of July, the Bank of England's chief economist Andy Haldane said the UK economy was on track for a V-shaped recovery.

These hopes then quickly faded as May's GDP figures showed a small 1.8% increase.

Anthony Codling, chief executive of property platform Twindig, said: "It appears that when it comes to housing the UK is over COVID-19 and wants to get moving and the housing market recovery is starting to look V-shaped".

Hugh Wade-Jones, managing director of Enness Global Mortgages, added that the latest figures are "quite astonishing" given the position of the market a few months ago.

He said: "There is no doubt that the huge surge of buyer demand seen once the market reopened has been seriously turbo-charged due to the stamp duty holiday announced shortly after.

"With the combination of both causing buyers to return to the market at mass.

But Gareth Lewis, commercial director of property lender MT Finance, said the figures would've been even better if transactions weren't taking so long.

He said: "Lenders still have staff furloughed or working from home, and it is taking them too long to process applications.

"This isn’t going to change for a while yet as they don’t have the capacity to bring everyone back to the office.

"With many surveyors only just coming back off furlough as well, this is having a negative impact on turnaround times."

The stamp duty break has added £30,000 to average property prices and sales have soared by 20 per cent, according to the Bank of England.

Rishi Sunak raised the stamp duty threshold from £125,000 a year to £500,000 a year in England and Northern Ireland on July 8, to boost the economy through the housing market.

The stamp duty cut could save buyers thousands of pounds in tax but critics have warned the tax break could push up prices as buyers now have more cash to compete with others to secure deals.

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