25th November 2015
Mortgage lending hit its highest total for seven years in October at £12.9bn, data from the British Bankers’ Association reveals.
The figure for gross lending was 26% higher than a year ago and the highest since August 2008.
The number of mortgage approvals in October was 27 per cent higher than a year ago, with remortgaging up 34 per cent and house purchases up 21 per cent.
Bank lending to companies was “polarised”, the BBA says. There is growth in lending to wholesale, retail and manufacturing sectors, while lending to the construction and real estate sectors is continuing to contract.
Richard Woolhouse, chief economist at the BBA, says:“These statistics show that housing market activity remained strong in October, with gross mortgage borrowing 26 per cent higher than a year ago and at its highest level for seven years.
“Consumers remain confident and their incomes are growing. Mortgage rates are at multi-year lows and people are snapping up the very competitive deals being offered by banks.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “Housing market activity continues to pick up as we head towards the end of the year, with gross mortgage borrowing at its highest level for seven years.
“Borrowers exude confidence, taking advantage of extremely cheap mortgage rates. Incomes are rising, while lenders are keen to lend in order to meet their year-end targets. However, while the Bank of England has issued concerns about the level of household debt, we are far from experiencing a debt-fuelled boom. Mortgage approvals are rising but far from racing away while growth is more moderate and therefore more sustainable than in the past. For many borrowers, tougher affordability criteria is still a barrier to getting a mortgage or remortgaging.”
Charlotte Nelson, finance expert at Moneyfacts.co.uk, says: “This rise has been greatly helped by high competition in the mortgage market. For instance, the average two-year fixed mortgage rate has dropped to 2.67%, the lowest on Moneyfacts.co.uk’s records.
“Competition among longer-term mortgage products has also intensified thanks to near-constant base rate speculation. As a result, the average five-year fixed rate has dropped significantly, falling from 3.96% a year ago to 3.29% today, and borrowers are clearly taking advantage of these low rates to secure lower monthly repayments over the long term.
“Borrowers who are still sitting on their standard variable rate (SVR) or who are coming to the end of a fixed mortgage deal need to act fast to secure a competitive rate while they still can.”