A Miracle - UK homeowners repaid more than they borrowed in July 2021

Following the Bank of England’s Money and Credit report for July 2021, the net repayment of mortgages in July, 2021 has beaten the record borrowing in June (£17.7) by £1.4 billion. This is quite a rare event which happened to occur only once in the previous decade in April, 2020. The repayment could be explained because of the tapering of the stamp duty holiday in England and Northern Ireland which caused a drop in housing market activity after June’s record. 

Yes, the “official spending holiday” is over. Until the 30th of June, the first £500,00 spent on a property was not obliged by a tax that could save you up to £15,000. However, do not worry just yet, there is some positive news in place. The tax break has scaled back to a threshold of £250,000 for a property and will return to its pre-pandemic level of £125,00 on the 1st of October, 2021. 

On the other hand, the approvals for house purchases, an indicator of future borrowing, decreased even further in July to 75,200. This is also the lowest point since July 2020, but remains above pre-February levels. Crucially, for investors - approvals for remortgage rose to 37,400 in July, yet remain low to the months running up to February, 2020. 

A previously seen record for sold houses in June (213,370) was followed by a decrease in July, as the transition of properties to other owners collapsed by 62% to 82,110. 

Overall, it can be seen that the spending levels were stimulated by the stamp holiday, people’s savings, and the pandemic. It can be predicted that they will continue to diminish until the support from the government ceases to exist.