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Mortgage approvals tumble after changes to stamp duty holiday

·2-min read
A stamp duty holiday was introduced during the pandemic  (REUTERS)
A stamp duty holiday was introduced during the pandemic (REUTERS)

Mortgage approvals for house purchases have reached the lowest level since July last year, as a stamp duty holiday became less generous.

Figures from the Bank of England show approvals last month were 75,200, down from 80,300 in June.

That was the lowest since July 2020, although still above pre-pandemic levels.

Estate agents and housebuilders saw high demand for properties during much of the pandemic, as people reassessed housing needs and a stamp duty holiday attracted buyers.

June was the last month buyers could enjoy a suspension of stamp duty on property sales of up to £500,000. From July to September 30 the threshold for the stamp duty holiday is £250,000.

Hina Bhudia, partner at Knight Frank Finance, said: “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.”

Martin Beck, senior economic advisor to the EY ITEM Club, said: . We may see another increase in activity in the next couple of months, as buyers line up transactions before the stamp duty threshold returns to its normal level of £125,000 from October. But once the stamp duty holiday has ended, the EY ITEM Club expects demand to soften and that there will be a modest correction in prices.”

Andrew Wishart, property economist at consultancy Capital Economics, said: “We suspect that home purchase demand will remain robust even after the stamp duty holiday ends altogether in October. Web searches for the property portals Rightmove & Zoopla remain well above pre-virus levels.”

Today’s figures also show homeowners made a rare net repayment of mortgage lending in July.

Individuals repaid £1.4 billion of mortgage debt, on net, last month. The net repayment in July followed record borrowing in June, which was probably boosted by the initial tapering off of the stamp duty holiday.

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