The Covid-19 pandemic has taken a toll on many sectors of the UK economy including the lending market. With the lockdown and the inability to operate as normal, many businesses, including lenders were unable to keep the flow of processing lending applications in line with usual demand. At the point that the Bank of England’s Monetary Policy Committee (MPC) cut the standard base interest rate in March, not once, but twice, to the historic low of 0.1% demand grew for mortgages and remortgages from borrowers looking to take advantage of lower interest rates. However, that demand did not equate into everyone being able to complete the process due to the lockdown.

According to the recent data from the Bank of England, mortgage approvals fell to exceeding low levels. For instance, there was a 90% decrease when comparing the approvals to February data, which was the month prior to the pandemic lockdown. 

Remortgage approvals declined to 30,400.

The Bank released the following statement alongside the release of the recent data: “The mortgage market remained weak in May in comparison to pre-Covid. On net, households borrowed an additional £1.2 billion secured on their homes. This was slightly higher than the £0.0 billion in April but weak compared to an average of £4.1 billion in the six months to February 2020.

“The increase on the month reflected more new borrowing by households, rather than lower repayments.

“In contrast to the increase in mortgage borrowing, approvals – a more forward looking indicator – fell back further, pointing to continued mortgage market weakness.

“The number of mortgage approvals for house purchase fell to a new series low in May, of 9,300. This was, almost 90 percent below the February level and around a third of their trough during the financial crisis in 2008.”