Activity in the UK mortgage market eased during July as the stamp duty holiday began to taper off.
Data from the Bank of England, published on Tuesday, revealed borrowers were granted 75,200 loans to purchase homes during the month, down from 80,300 in June. That’s the lowest reading since July 2020.
“We're likely to see more volatility in sales over the coming months as the tax break tapers further, but all-in-all this marks the beginning of a return to more normal housing market conditions,” says Hina Bhudia, Partner at Knight Frank Finance.
Though July’s lending marked the year’s low point, approvals remain about 15% above pre-pandemic norms – another illustration of the degree to which the past 18 months have been a record breaking period for the housing market.
“Though easing, sales rates remain well above conditions that were typical before the crisis and huge amounts of activity is being sustained by some of the most attractive deals we’ve ever seen on the high street,” Hina continues. “Savers tucked away record sums during the pandemic and, as a result, lenders have massive amounts of funds on their books. It's clear they are eager to build market share as quickly as possible.”
Competition among lenders has sparked a price war on the high street. Earlier this month, Halifax launched a two-year fixed deal at a rate of 0.83%, which at the time was the cheapest deal among the major lenders. However, there are some early signs the price war is starting to fizzle, according to Hina.
“Where in recent weeks we’ve seen banks ruthlessly undercutting each other, they are now simply seeking to match the best deals available,” Hina adds. “That’s usually a sign mortgage costs are approaching as low as they’re likely to get for some time, which will coax significant numbers of borrowers into opting for fixed deals in the coming weeks.”
If you, a family member or friend is looking to buy a property this year and would like to discuss the options when it comes to securing a mortgage, speak to us. We know all the major lenders in the marketplace and can help find the most cost-effective and suitable mortgage for you.