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Mortgage lending hits highest level since 2007

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14/09/2021
The amount lent in mortgages hit its highest level since 2007 in the second quarter of the year, figures reveal.

Data from The Bank of England shows £89bn worth of mortgage loans were handed out between April and June, more than twice the level seen during the same period last year.

Two-thirds of these loans (66 per cent) were for house purchases by people who planned to live in the property.

Of this group, 25 per cent were first-time buyers, up from 18 per cent a year earlier.

The value of mortgages agreed for the coming months more than doubled from a year earlier, at £85.6bn.

However, this is still £2.1bn below the peak at the end of 2020.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “First time buyer FOMO helped fuel the rush for mortgages ahead of the stamp duty holiday deadline, pushing them higher than any time since the financial crisis. The fact that these buyers have less to gain from the stamp duty holiday itself demonstrates that the property boom isn’t over yet.

“Overall, mortgages agreed for the coming months fell slightly, so we expect sales to back off from record highs. However, they remain significantly higher than a year earlier, so we don’t expect the market to fall silent.

“In fact, first time buyer statistics reveal real strength in the market. These buyers made up a higher proportion of mortgage borrowers than at any other time since the onset of the pandemic. They had far less to gain from the stamp duty holiday than everyone else. They are already exempt from stamp duty on properties worth less than £300,000, and on properties worth £300,000-£500,000, they only pay 5 per cent on the property value over £300,000. Given that the average first time buyer property in March cost £214,452, most of them don’t have stamp duty to pay anyway.

“Instead, they’ve been driven by other forces in the market, which aren’t going anywhere in a hurry. Rock bottom mortgage rates, and the fact some people were able to save more money during lockdown, made the move add up for more prospective buyers. FOMO played its part, as rising house prices convinced buyers to take the plunge before prices rose out of reach. And it helped that the prices of typical first homes, especially flats, have risen less than those for houses, as current owners have joined the race for space.”

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