New UK mortgages hit six-year high before coronavirus hit

New mortgage lending hit a six-year high before the coronavirus outbreak began to cripple the UK economy, official figures show.

Lenders approved 73,500 new mortgages for property purchases in February, according to Bank of England data published on Monday.

It marked the highest monthly level of borrowing since January 2014, while the total value of loans reached its highest since February 2008.

The housing market had seen a bounce in activity after prime minister Boris Johnson’s election victory in December eased political uncertainty.

Read more: Purplebricks to ask UK government for help as property market freezes

But the effects of the coronavirus had only just begun to be felt in the UK when the latest figures were compiled last month.

Property viewings have since slumped and growing numbers of sales fallen through, as the economic fallout grows from the pandemic and government lockdown.

Zoopla has predicted a 60% decline in residential property sales in months ahead, while estate agent Purplebricks announced it would furlough staff on Monday.

“Never before has such strong mortgage approvals data rung so hollow. It feels like it came from another time,” said Andrew Montlake, managing director of mortgage broker Coreco.

“Within just a few weeks the property and mortgage markets have gone from strength to abject uncertainty,” he added.

Read more: Government warns over house moves as UK market thaws

Simon Gammon, a managing partner at Knight Frank Finance, said lending would be “suppressed” in months to come, with no repeat of the surge in deals that boosted the February figures.

Restrictions on movement and surveyors’ inability to visit properties will push down lending, Gammon said.

Fears about infection during viewings and uncertainty over the market had already dampened activity before the government’s recently announced ban on non-essential travel and warning against house moves.

Read more: Zoopla warns coronavirus will paralyse UK property market

Some lenders have now cut back on new mortgage products or demanded higher deposits, despite the Bank of England slashing interest rates. But Gammon said lenders “continue to show appetite to lend,” with some doing “automated or desktop” valuations.

He noted that some lenders were now operating with skeleton staff, and were “struggling to cope” with demand for mortgage holidays. Some had now added website forms to ease pressure on call centres, he noted.