Mortgage: BoE release ‘astonishing’ approval figures as stamp duty cuts take effect

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MORTGAGE approvals have risen to new highs according to data released today from the Bank of England. This increase has been revealed following the stamp duty cuts which were introduced by Rishi Sunak in a bid to keep the housing market afloat during the pandemic.

Mortgage approvals shot up in July when compared to June according to the latest figures from the Bank of England. Lenders provided 66,281 home-loan agreements last month, up from 39,902 in June.

This is the highest approvals have been since February 2020 and it is close to the same level seen in July of last year.

Hugh Wade-Jones, the Managing Director of Enness Global Mortgages, commented on the data: “The latest rate of mortgage approvals is really quite astonishing given the dire position of the market just a few short months ago.

“There is no doubt that the huge surge of buyer demand seen once the market reopened has been seriously turbo-charged due to the stamp duty holiday announced shortly after.

“With the combination of both causing buyers to return to the market at mass.

“As a result, we’ve seen the number of people approved for a mortgage rebound from the depths of pandemic paralysis in May to hit almost the same levels as this time last year in just two months, with the current trajectory sure to return the market to pre-lockdown levels in no time.

“The rate of this return to form really shouldn’t be underestimated and these notably heightened levels of buyer demand should prove just the medicine for the UK property market, reversing any pandemic decline in house price growth seen during lockdown.”

Stamp Duty became a key target for Rishi Sunak as he noted the dire impact coronavirus has been having on the housing market.

In early July, the Chancellor of the Exchequer confirmed that changes to stamp duty would be introduced immediately to support the housing market: “So to catalyse the housing market and boost confidence, I have decided today to cut stamp duty.

“Right now, there is no stamp duty on transactions below £125,000.

“Today, I am increasing the threshold to half a million pounds.

“This will be a temporary cut running until 31st March next year.

“And, as is always the case, these changes to stamp duty will take effect immediately.

“The average stamp duty bill will fall by £4,500.

“And nearly nine out of ten people buying a main home this year, will pay no stamp duty at all.”

Stamp duty generally must be paid when a person buys a property or land over a certain price in England or Northern Ireland, with there being different systems in place in Scotland and Wales.

The tax is paid when a person:

  • buys a freehold property
  • buys a new or existing leasehold
  • buys a property through a shared ownership scheme
  • is transferred land or property in exchange for payment, for example they take on a mortgage or buy a share in a house

How much a person pays in stamp duty is dependent on whether the land or property is residential and the purchaser is a first-time buyer.

Additionally, it can also be dependent on non-residential or mixed-use.

HMRC provides stamp duty calculator which can help buyers work out exactly how much tax they’ll pay.

Where this tax is due, it will apply to people who are buying outright or with a mortgage.

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