Commenting on today’s mortgage lending figures from today’s Bank of England Money & Credit Report, Nitesh Patel, Strategic Economist at Yorkshire Building Society, said:

Mortgage approvals edged up from 86,897 in April to 87,545 in May, remaining considerably higher than pre-pandemic levels as the UK’s housing market continues to move with a force reminiscent of a juggernaut. This is borne out in net lending which more than doubled to £6.6 billion in May, from £3 billion in April.

As well as the pandemic focusing householders’ minds on the desire for more space both inside and outside homes, the strong level of mortgage approvals reflects the renewed confidence of both buyers and sellers as the Government announced the extension of the Stamp Duty holiday to the end of June.

Buyers have been racing to get transactions completed before the cut-off date at the end of the month, which will see the tax-free allowance on purchase price drop from £500,000 to just £250,000. This could mean buyers at the higher end of the market in northern regions and in mid-range transactions in London and the south east face a tax liability for thousands of pounds, causing sales and chains to fall through.

That said, we believe that the current drivers of activity – buyers re-evaluating their housing needs and looking for more space – will continue to be a key motivation for house purchases after the June and September deadlines. Whilst growth may slow towards the end of the year, housing demand continues to outstrip supply, making it doubtful that an aggressive downward adjustment of house prices will take place in the near future.

All information correct at time of publication.