UK mortgages hit their highest level since modern records began, as buyers rushed to exceed the now extended stamp holiday deadline.
Figures from the Bank of England showed that Rishi Sunak’s decision in the budget to extend the tax break until June did not dampen an explosion of activity in the housing market in March.
Although the number of new mortgage approvals rose from 87,000 to 83,000 in March, they remained above the 73,000 recorded in February 2020, the last month before the UK entered its first pandemic-induced foreclosure .
Closing the deals brought net mortgages to £ 11.3 billion in March – more than any month since the series began in 1993. With foreclosure measures affecting bars, restaurants, shops and other businesses Leisure, consumers continued to repay their credit card debts, with the Bank announcing net repayments of £ 500million in March.
Economists said the housing market was fueled by homebuyers who generally belong to high-income groups who had avoided the brunt of job losses caused by the Covid-19 pandemic.
Laith Khalaf, financial analyst at AJ Bell, said low interest rates from the Bank of England were also helping fuel the mortgage boom. The Threadneedle Street monetary policy committee that sets rates is expected to keep the cost of borrowing unchanged at historically low levels at its next meeting on Thursday.
However, he added, “Pushing your finances to the limit to borrow as much as possible has never been a good idea, but when interest rates seem like they can only go in one direction, it’s especially dangerous. “
Separately, an update on the state of manufacturing showed that despite supply shortages, the industry recorded its best performance since the mid-1990s in April. The Markit / CIPS Final Purchasing Managers Index (PMI) stood at 60.9 last month, slightly up from the initial flash estimate of 60.7, and well above the dividing line of the 50 between expansion and contraction.
The report showed manufacturing output increased for the 11th consecutive month, with output growth boosted by an easing of foreclosure restrictions, improved demand and an increase in backlogs of work.
Rob Dobson, Director at IHS Markit, said: “Further easing of restrictions on CCovid-19 at home and abroad has led to another marked growth spurt at UK factories. The stock PMI hit a nearly 27-year high as production and new orders rose at increased rates. The outlook for the industry is also increasingly positive, with two-thirds of manufacturers forecasting higher production in a year. Export growth remains relatively subdued, however, as small manufacturers find it difficult to export.
“The sector also remains plagued by supply chain issues and growing inflationary pressures. The disruptions resulting from Brexit and Covid-19, in particular in ports, have resulted in an almost record additional lengthening of supplier delivery times. The resulting input shortages kept producer price inflation among the highest in four years. “
The latest snapshots come against a backdrop of a rapid recovery in economic activity as lockdown measures are relaxed. Sunak said on Tuesday he believed the early indicators were “signs of cautious optimism” about the strength of the post-pandemic UK economy.
Speaking at an event hosted by The Wall Street Journal, he said: “We are seeing consumer confidence in the UK returned to its pre-pandemic level. Surveys on the side of companies, CFOs [chief financial officers] in particular, are very positive about the short-term outlook.
“The signs are promising.”