UK mortgage approvals reach highest level in 13 years

Stamp duty holiday pushes housing market into top gear despite pandemic

epa08948442 (FILE) - Residential housing are seen by a view of the City of London financial district in London, Britain, 02 July 2020 (reissued 19 January 2021). The UK government Office for National Statistics is to publish the official HPI, House Price Index for UK on 20 January 2021.  EPA/NEIL HALL *** Local Caption *** 56190338
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The UK's housing market has remained buoyant despite the pandemic, with lenders approving more mortgages in 2020 than in any year since 2007, according to Bank of England (BoE) figures.

The strong lending figures were attributed to a temporary tax cut that allowed buyers to save as much as £15,000 ($20,000).

The stamp duty holiday propelled the housing market even as the coronavirus crisis sent the wider economy into its deepest slump for three centuries.

The jump was partly due to pent-up demand from the first lockdown last spring, when the market was largely shuttered and mortgage approvals collapsed. However, analysts expect the housing market to slow in 2021. The tax break expires soon, unemployment is rising and new restrictions on work and social interaction are set to run at least until March.

Lenders approved 103,381 loans in December, compared with a revised 105,324 in November, the BoE said on Monday. The median forecast among economists was for 100,000. It left the total for 2020 at 818,537, the highest since 2007.

In contrast, limited opportunities to spend during successive lockdowns led to consumers repaying £16.6 billion of unsecured debt last year, the most since annual records began in 1994. In December alone £965 million of mostly credit-card debt were paid off.

The repairing of household balance sheets leaves households in a strong position to spend once restrictions are lifted, potentially giving a strong boost to economic growth. Almost £21 billion piled up in personal bank accounts in December.

Large businesses repaid debt in December but small firms were forced to add to their borrowings to survive, the BoE figures showed.