The pandemic has fuelled a lot of home moves, buoyed by Rishi Sunak’s stamp duty holiday.

The number of mortgages given the green light soared to a 13-year high in 2020 despite successive lockdowns.

A total of 818,500 mortgages were approved for people buying a home last year, the highest level since 2007.

The increase came despite the level of pipeline loans - in other words, mortgages that have been given the go-ahead but the money has not yet been released - slumping to a record low of 9,400 in May. The housing market bounced back in the second half of the year, according to the Bank of England.

But there are signs that the boom is starting to slow, with the number of mortgages approved in December dropping slightly compared with November’s figure, as the end of the stamp duty holiday looms.

Why is this happening?

Disruption caused by the first national lockdown in March, which saw the housing market shut down temporarily, led to a sharp fall in property transactions.

But the market took off again once restrictions were lifted, unleashing pent-up demand and causing people to carry out a once-in-a-lifetime re-assessment of their housing needs.

At the same time, the stamp duty holiday prompted many people to bring forward purchases in order to benefit from the tax break. 

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Who does it affect?

It’s good news generally for people needing a loan to move home.

Sales were agreed on more than £300bn worth of property last year, that's 26% higher than in 2019, according to our House Price Index.

But first-time buyers struggled during 2020, as lenders withdrew their low-deposit mortgages.

What’s the background?

With a third national lockdown now in place, would-be sellers appear to have paused in listing their homes for sale, according to our House Price Index.

However, the pandemic continues to fuel buyer appetite, buoyed by a last-minute stamp duty deadline rush.

The mismatch between supply and demand could put further upward pressure on prices, but the shortage of homes on the market is likely to lead to a dip in transactions.

There have been calls for the government to extend the stamp duty holiday to provide further support to the market, but it has so far ruled out doing so.

Top three takeaways

  • The number of mortgages approved soared to a 13-year high in 2020 despite successive lockdowns
  • The increase came despite the level of pipeline loans slumping to a record low of 9,400 in May
  • There are signs the boom is starting to slow, with mortgages approvals dropping slightly in December

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