However, the temporary bottleneck associated with the implementation of MMR in early 2014 has caused overall approval numbers to slow throughout the rest of the year.
Remortgaging numbers in 2014 (233,000) were 6% lower than in 2013 and the number of loans approved for equity withdrawal continues to fall, to its lowest annual total yet (81,000).
Gross mortgage borrowing in December was £10.0 billion – 12% lower than in the same month last year. However, over the whole year, gross mortgage borrowing was £130 billion compared with £110 billion in 2013. Despite a slowdown in demand and lower approval numbers in the second half of 2014, the overall mortgage stock is 1.5% higher than a year ago.
In December, compared with a year previously, house purchase approvals were 24% lower, remortgaging down 20% and equity withdrawal 32% down.
Additionally, higher demand for personal loans continues to reflect an easier borrowing climate and improved household finances. Annual growth in unsecured borrowing is currently 3.8%, the highest rate since late 2008.
Since the changes to ISA rules in July 2014, the last six months have seen net inflows of £9.3 billion. A total of £13.1 billion was invested into ISAs in 2014, some 57% more than in 2013. Overall personal deposits are growing by 4.0% annually.
Richard Woolhouse, Chief Economist at the BBA, said:
“The mortgage market has been softening since the spring, but for customers taking out home loans right now there are some great deals and we expect the market to begin to grow again this year."
Richard Sexton, director of e.surv Chartered Surveyors, comments:
“2014 was a tale of two halves – with strong lending in the first half and a more subdued second. The important thing to remember is that seasonal trends are far from the only ones that affect the mortgage market. The market doesn’t always split itself easily into quarters and halves, so a wide-angle view is required to identify the prevailing trends.
“In the longer term, we can see that purchase mortgage lending was heading for a peak in January 2014. The reasons for the subsequent drop are clear in light of changes to Funding for Lending. In January, the scheme ceased to apply to home purchase mortgages. The changes were implemented because house purchase approvals in the last half of 2013 provoked fears of an overheated market.”
Brian Murphy, Head of Lending at Mortgage Advice Bureau, said:
“Despite the implementation of the Mortgage Market Review causing a temporary slowdown in the number of mortgage approvals, 2014 as a whole saw approvals rise by almost 10% year-on-year, while gross mortgage lending increased by £20 billion in the same period. This demonstrates the market’s resilience, and while it’s unlikely that 2015 will match the frenetic pace of lending seen at the beginning of last year, current signs are pointing towards steady and sustainable growth.
“Consumers seeking mortgage finance have not been in such a strong position since the recession hit. Lenders’ appetite for business is far from satiated, and fierce inter-lender competition is resulting in record lows for both short and long-term fixed rates. Rock bottom variable rates are also becoming increasingly popular as the spectre of a base rate rise remains out of view: our data shows one in ten mortgage borrowers opted for a variable rate in December.
“These increasingly affordable mortgage products are not just coming from high street lenders, but also building societies and specialist lenders who are welcoming growing numbers of consumers. This is particularly beneficial for those borrowers who do not fit the high street’s rigid requirements, and should encourage a more diversified demographic of UK homeowners as well as further improve product choice and availability.”
