Mortgage approvals reached an all time high recently as the scramble to buy homes continued.

The number of mortgages given the green light hit their highest level since October 2007 as a result of pent-up demand following lockdown and the government’s stamp duty holiday.

A total of 82,400 mortgages were approved in September, a 24% increase on the previous month’s total, according to the Bank of England.

David Cachet, managing director, Homefindist, said: “Today’s report confirms the bounce back in mortgage approvals for house purchases that we identified during August. We have seen continued growth in applications during September showing that demand remains high at approximately 34% up on a year ago.

“At the same time, there are signs of softening of demand from first-time buyers with 18% fewer applications for mortgages requiring less than a 14% deposit in September when compared to August.

“This is potentially affected by reducing availability of low deposit mortgages but has been offset by strong demand amongst home movers and higher equity applicants.”

Why is this happening?

A number of factors have combined to produce August’s strong figure for mortgage approvals for house purchase.

On the one hand, demand that built up during the weeks that the housing market was closed is continuing to work through the system.

At the same time, lockdown itself has prompted people who were previously happy to stay put to consider moving, after finding their current home did not meet their needs during lockdown.

The government’s stamp duty holiday, under which stamp duty is waived on homes costing up to £500,000 until 21 March, has provided a further boost to the market.

Who does it affect?

The fact that the housing market is so buoyant is good news all round.

Prior to the pandemic, property transaction levels had been held back by a shortage of homes for sale.

The situation created a vicious circle for the housing market, with existing homeowners delaying listing their property because of a lack of choice for their next home.

The current high level of activity in the market indicates this issue has now been overcome.

It is also significant that mortgage approvals for house purchase have reached their highest level since the global financial crisis, as this suggests despite concerns about economic uncertainty and rising unemployment, banks and building societies are still happy to lend on homes.