UK mortgages: post-Covid approvals bounce back from 'pandemic paralysis' but remain weak

Mortgage lending bounced back last month after hitting a record low in May, as the economy started to reopen following the coronavirus pandemic.

Bank of England figures show mortgage approvals increased to 40,010 in June from 9,300 the previous month, when the pandemic strangled lending.

The central bank’s monthly money and credit report said: “The mortgage market showed some signs of recovery in June but remained relatively weak in comparison to pre-Covid.”

In February, before the virus hit the UK economy, the bank reported 73,700 monthly mortgage approvals.

The report also revealed households repaid £86 million of consumer credit last month, as the lockdown reduced opportunities for people to spend.

Meanwhile, households borrowed an extra £1.8 billion in loans in June, following larger net repayments in April and May of £7.3 billion and £3.3 billion respectively.

UK households and businesses strengthened their financial holdings by £16 billion in June, amid a slowdown in deposits from the past three months.

Hugh Wade-Jones, managing director of Enness Global Mortgages, said the figures are “yet more signs that the wider housing market has bounced back from pandemic paralysis with mortgage approvals now sitting at more than four times the levels seen in May”.

He added: “This is largely due to the influx of buyer demand that hit the market following the easing of lockdown restrictions and demonstrates a market on its way back to good health."

Craig McKinlay, new business director at Kensington Mortgages, said: "The Chancellor’s stamp duty holiday announcement, combined with upcoming changes to planning regulation, mean we are seeing more stimulus being created to get the market moving again – and next month’s results will hopefully reflect these measures further."