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Buying frenzy as stamp duty holiday deadline looms

5 May 2021December 14th, 2022

UK mortgage borrowing has hit a record high as buyers rush to beat the now-extended stamp duty holiday deadline.

The latest figures from the Bank of England showed that Rishi Sunak’s decision in the Budget to extend the current tax break until June helped maintain high levels of demand for property.

Although the number of new mortgage approvals dropped from 87,000 to 83,000 in March, they remained higher than the 73,000 recorded pre-lockdown in February last year.

The completion of deals took net mortgage lending to £11.3bn in March – the highest monthly tally since the series began in almost 30 years ago.

John Phillips, national operations director at Just Mortgages and Spicerhaart, said: “This year has been unprecedented in terms of the volume of mortgages, and March was possibly the peak in an impressive climb. Partially driven by a desire to beat the initial stamp duty deadline, we’ve had a continuous stream of clients looking for mortgages in the first quarter of 2021.”

Jonathan Sealey, CEO at specialist lender Hope Capital, commented: “Everybody expected the stamp duty holiday to drive activity especially as the deadline loomed closer, but to reach the highest level of borrowing in almost 30 years is exceptional.”

The industry is starting to get used to seeing these types of figures for mortgage approvals, according to Richard Pike, Phoebus Software sales and marketing director.

He said: “The stamp duty holiday lit the fire and will continue to drive the market until it comes to an end. It is good to see the housing market as buoyant as it is, but it’s also causing some consternation.

“House prices are being driven up, with estate agents reporting many buyers offering over the asking price to secure their preferred property. How sustainable this is, when lenders are tied by strict affordability guidelines, is debatable. If the housing market is helping to drive the nations’ recovery in an unsustainable manner, will we be generating problems further down the track?

Also in response to the Bank of England’s latest Money and Credit Report, David Ross, managing director, Hometrack, commented: “Mortgage market momentum has been growing month on month since the start of the year and, while the Bank of England today reports that net mortgage borrowing reached an 18-year high last month, our figures show that April is set to outperform March, signaling further activity to come for lenders.

“Our data shows that £150bn of property transactions were completed in the first 15 weeks of 2021. Running ten weeks ahead of a typical year, this level of sales wouldn’t normally be achieved until the end of June. At the same time, one in every 50 homes was sold between 1st January and 15th April, up from one in every 100 homes during the same period last year.

“The return of high loan-to-value mortgage products has opened up the market to smaller properties, which often rely on high LTV financing while adding further demand that stimulates the supply chain.

“As the end of the full SDLT holiday approaches at the end of June, mortgage applications are expected to continue to rise. Lenders are anticipating a peak in mortgage market activity until this time, before tapering off in line with the traditional seasonal slowdown from July onwards and the arrival of the summer holidays. However, the emphasis is on ‘tapering’; we have no reason to expect a market cliff edge.”