Press release

29 Oct 2020 London, GB

September mortgage approvals rise to 13-year high – EY ITEM Club comments

The Bank of England reported that mortgage approvals for house purchases extended their recent upward trajectory to reach a 13-year high of 91,454 in September.

Press contact
Nick Cosgrove

Senior Manager, Media Relations, Ernst & Young LLP

Professional services corporate communications specialist. Reluctant dog owner and long-suffering Watford fan.

Related topics Growth
  • The Bank of England reported that mortgage approvals for house purchases extended their recent upward trajectory to reach a 13-year high of 91,454 in September. This was up from 85,530 in August, 67,098 in July and a record low of just 9,338 in May
  • September’s 13-year high for mortgage approvals provides clear evidence of the ongoing pick-up in housing market activity that has occurred since pent-up demand was released by the easing of restrictions from mid-May. This buoyancy has been reinforced by the Chancellor raising the Stamp Duty threshold to £500,000 from mid-July through to 31 March 2021

Howard Archer, chief economic advisor to the EY ITEM Club, says:

“The Bank of England reported that mortgage approvals for house purchases increased again to be at a 13-year high of 91,454 in September; this was up from of 85,530 in August from 67,098 in July, 40,221 in June and a record low of 9,338 in May.

“September’s 13-year high for mortgage approvals provides clear evidence of the marked pick-up in housing market activity that has occurred since pent-up demand was released by the easing of restrictions from mid-May onwards. This buoyancy has been reinforced by the Chancellor raising the Stamp Duty threshold to £500,000 from mid-July through to 31 March 2021.

“The monthly RICS residential monthly survey for September observed that its findings “continue to point to a strong upturn in activity across the market, as indicators on enquiries, agreed sales and new listings all remain strongly positive.””

September saw renewed repayment in net unsecured consumer credit – EY ITEM Club comments

  • The Bank of England reported there was a renewed net repayment of £622 million in net unsecured consumer credit in September; there had previously been modest rises in net unsecured consumer credit in August and July after four successive months of net repayments through to June
  • The return to modest net unsecured consumer borrowing in July and August had tied in with the pick-up in consumer activity over Q3
  • However, the renewed net repayment in unsecured credit in September suggests consumers were still wary about borrowing. Consumer confidence has decreased in October amid rising COVID-19 cases and increased restrictions on activity
  • The four months of net repayments of unsecured consumer credit through to June are likely to have been the consequence of a lack of opportunity to spend during the national lockdown, as well as heightened consumer caution. On the positive side, the four months of net repayment of unsecured consumer credit improved many households’ balance sheets, which supported purchasing ability

Howard Archer, chief economic advisor to the EY ITEM Club, says:

“The Bank of England reported that there was a net repayment of £622 million in unsecured consumer credit in September. This followed increases of £285 million in August and £1.1 billion in July, which had been the first rise since February.

“There had previously been four months of net repayments in unsecured consumer credit, although this had slowed to £427 million in June from £4.4 billion in May and a record £7.5 billion in April. There had also been another net repayment of £3.1 billion in March. March-June had marked the first time that there had been four successive months of net repayments of unsecured consumer credit since the second half of 2010.

“The net repayments of unsecured consumer credit during March-June are likely to have been the consequence of a lack of opportunity to spend during the national lockdown as well as heightened consumer caution.

“However, there was a substantial pick-up in consumer activity over the third quarter as restrictions were eased from June, while confidence improved from its May lows. Retail sales volumes rose 1.5% month-on-month in September, which was a fifth successive increase and took them 5.5% above their pre-lockdown February level. Retail sales volumes rose a record 17.4% quarter-on-quarter over the third quarter.

“Nevertheless, the renewed net repayment in unsecured credit in September points to a fair degree of caution over borrowing among consumers.”