The dash to take advantage of the stamp duty holiday continued in October, with nearly 100,000 home loans approved.

The number of mortgages approved for people buying a home hit a 13-year high in October.

A total of 97,500 loans were in the pipeline during the month as consumers continued to scramble to take advantage of the stamp duty holiday, according to the Bank of England.

Home loan approvals reached their highest level since October 2007, having grown steadily since August (when 84,700 mortgages were approved) and September, which saw 91,500 mortgages given the green light.

October’s figure of nearly 100,000 mortgage approvals was a third higher than in February this year before Covid-19 lockdowns started to impact the property market. It is also 10 times higher than the lowest point mortgage approvals seen last May.

It comes as our latest House Price Index showed strong buyer demand had pushed property price growth up to 3.5%, its highest level since December 2017, with house price inflation set to hit 4% by the end of the year.

Why is this happening?

The surge in house purchases has been driven by a combination of factors.

On the one hand, the government’s stamp duty holiday on homes costing up to £500,000 has triggered a mini boom as people look to take advantage of the tax break.

At the same time, the coronavirus pandemic has triggered a ‘once-in-a-lifetime’ reassessment of what people want from their homes, particularly as increasing numbers now work from home.

Who does it affect?

The rush to buy homes has helped to solve one of the major blockages in the property market in recent years.

The market was previously dogged by a shortage of homes for sale, as existing homeowners were put off from listing their current property due to a lack of choice for their next one, creating a vicious circle.

But buyer’s desire to meet the deadline for the stamp duty holiday, has led to an increase in sellers, as well as buyers, in the market, increasing the amount of choice available for everyone. 

What’s the background?

The property market is expected to remain strong for the rest of the year, defying the traditional seasonal slowdown as Christmas approaches.

In fact, our figures show that the property sales pipeline is currently 50% bigger than it was this time last year, with 1.1 million homes expected to change hands in 2020. This means transactions for this year will be just 6% lower than in 2019, despite the disruption caused by the coronavirus pandemic.

There could also be another spike in buyer activity in January, as people make a last ditch bid to benefit from the stamp duty holiday – although only around half of sales agreed in January are expected to complete in time for the 31 March 2021 deadline.

But the outlook is more uncertain going further into 2021, when a combination of the economic impact of the pandemic, rising unemployment and the end of the stamp duty holiday is expected to slow activity in the market.

Top three takeaways

  • The number of mortgages approved for people buying a home hit a 13-year high in October

  • A total of 97,500 loans were in the pipeline during the month as consumers continued to scramble to take advantage of the stamp duty holiday

  • The figure was a third higher than in February this year, before Covid-19 lockdowns started to impact the property market, and 10 times higher than the low in mortgage approvals seen in May

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