The Bank of England has reported that mortgage market continued to show more signs of recovery in August.

Households borrowed an additional £3.1 billion secured on their homes, following borrowing of £2.9 billion in July.

Mortgage borrowing troughed at £0.5 billion in April, and is still a little below the average of £4.2 billion in the six months to February 2020. The increase on the month reflected slightly higher gross borrowing of £18.8 billion, although it is still below the pre-Covid February level of £23.7 billion.

The number of mortgage approvals for house purchase continued increasing sharply in August, to 84,700 from 66,300 in July.

This was the highest number of approvals since October 2007 but the Bank said it only partially offsets weakness seen between March and June. In total, there have been 418,000 approvals in 2020, compared with 524,000 in the same period in 2019.

Andrew Montlake, managing director at Coreco, said: “The market remains exceptionally busy although it is no longer first-time buyers driving things but second and subsequent home movers.

“First-time buyers have been decimated by changes in mortgage lenders’ appetites, with few products available at 90% LTV and income multiples becoming ever more conservative.

“People who have decent equity in their property, secure jobs and are looking to move away from cities to gain bigger homes and more space given the new WFH culture, are the ones best able to take advantage of the stamp duty holiday.

“People who are looking to purchase a second or holiday home are also exceptionally busy.

“Landlords have also had something of a renaissance as they stand to gain from some of the lowest rates in the buy-to-let market we have seen and are no longer having to compete with first-time buyers.

“Right now, the market is characterised by high demand for mortgages and people wanting to buy, but a lack of suitable products.

“Lenders continue to struggle with capacity and are also wary of moving up the risk curve given the precipice we are approaching in the form of the end of the furlough scheme and a potentially messy Brexit scenario.

“Mortgage approvals may have risen sharply but the market, given the uncertainty of the Covid economy and Brexit, remains on a knife edge.

“With lender criteria and appetites changing almost by the day, the role of independent brokers has never been more important.”