UK mortgage approvals show property demand holding up

London

UK mortgage approvals fell for a second month in July but remained well above pre-pandemic levels, suggesting demand for property is holding up despite the tapering of a tax break on purchases.

Banks and building societies authorised 75,152 home loans, the least in a year and down from 80,272 in June, the Bank of England (BOE) said on Tuesday.

Britons buying a home for more than £250,000 (S$462,499) in July faced a higher tax bill after the stamp-duty holiday introduced by Chancellor Rishi Sunak last summer began to be curtailed ahead of the tax cut ending altogether next month. A race to complete purchases before June 30 sent mortgage lending, house prices and property transactions to record levels.

However, approvals in July were still above levels of around 67,000 averaged in the six months before the pandemic struck in March last year. That suggests demand is being sustained by factors such as cheap borrowing costs, the build-up of savings during lockdowns and a pandemic-driven preference for larger homes away from populated urban centers.

Tuesday's BOE data also show: Consumers repaid £42 million of unsecured debt on balance in July. There was a £1.4 billion repayment of mortgage debt, reflecting transactions being brought forward into the first half of 2021. Borrowing hit a record £17.7 billion in June. Households deposited an extra £7.1 billion with lenders, down from an average of £12.8 billion in the previous six months.

The decline reflects the reopening of the economy and increased opportunities to spend. BLOOMBERG