The data shows that monthly house purchase approvals are trending upwards and April was 3% higher than in the same month last year, possibly influenced by the introduction of the Land and Buildings Transaction Tax in Scotland.
Remortgaging and other approvals also increased in April and are some 6% higher and 7% lower respectively than a year ago. Approvals overall were therefore higher than in March and some 3% higher than the same time a year ago.
Gross mortgage borrowing in April was £10.5 billion – 13% lower than in the same month last year but 2% higher than in March. Although seeing slower demand in the second half of 2014, the overall mortgage stock is now 1.0% higher than a year ago.
There were also substantial deposits into NISAs of £4.4bn compared with £3.9bn in April last year. The alternative investment option of Pensioner Bonds, which had been attracting deposits, was withdrawn by NS&I on 15 May. Annual growth in unsecured borrowing, at 4.9%, is at its highest rate since autumn 2010 with both credit card and other unsecured borrowing (personal loans and overdrafts) growing at similar rates.
Richard Woolhouse, Chief Economist at the BBA, said:
“British businesses and consumers have started to put their foot on the gas. There appears to be broad confidence about the economy, which the banks are supporting through affordable credit, leading to rises in borrowing across the board.
“There was a significant pre-election jump in mortgage approvals which we would expect to continue in the coming months.
“There was a sharp rise in the amount savers deposited in their bank accounts and also in the amount people are borrowing through personal loans and credit cards. This suggests that consumer spending will continue to drive the British economy forwards.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, added:
"There has been much talk of a pre-election lull in the upper echelons of the housing market but in the mainstream it was ‘business as usual’ with mortgage approvals rising significantly in April. The frenzy we saw in the first part of last year has not been repeated yet this more considered phase, with growing confidence among buyers, is likely to be more sustainable.
"Borrowers are taking advantage of record low mortgage rates and the signs are that these will continue to be competitive over coming months. When a record-breaking mortgage rate is pulled it is soon replaced by an even lower one as lenders compete for business. They have ambitious targets for the year and in order to achieve them will either have to compete on rate or loosen criteria. While many are not yet prepared to do the latter, they are tightening margins and cutting rates across the loan-to-value curve.
"Remortgaging numbers also continue to grow as borrowers take advantage of lower rates and their improved circumstances to secure a new deal. Many people have more equity in their homes than they did a year or two ago, which should make it easier to remortgage. And with renewed talk of the possibility of an interest rate rise at some point, many borrowers are opting for the security of a cheap fixed-rate mortgage."
Brian Murphy, Head of Lending at Mortgage Advice Bureau, commented:
“Today’s data shows we are witnessing a resurgence in mortgage lending by the major banks with approvals hitting a 13 month high in April. After a slow start to 2015, loan approvals are now at their highest since the Mortgage Market Review took effect and have risen for three successive months. It is a sure sign for borrowers that there is life left on the high street despite growing competition from smaller building societies and specialist lenders.
“The BBA’s data suggests that the impact of the build-up to the general election on market activity was greatly overstated. The combination of record mortgage product numbers and extremely favourable pricing has proved more than enough to sustain demand regardless of political uncertainty. The stability of a majority government should also provide a solid base for the market to progress.
“The growing number of mortgage approvals shows that consumers are still able to access the market despite rising house prices – but it is noticeable that the average loan in April was the highest recorded by the BBA since records began in 1997. As the new government progresses its plans for the housing market, policymakers must work harder to improve access to affordable housing for would-be borrowers on modest incomes.”
