Higher capital repayment (including homeowners moving between lenders) continues to generate the contractions in borrowing stocks seen over the past year and explains the subdued picture of net borrowing.
The numbers of approvals for house purchase and remortgaging continued the upward trend seen since the turn of the year and were both some 33% higher than last year. Assistance schemes for mortgage lending are also expected to help more first-time buyers and housing chains generally. The average house purchase approval rose to £160,100.
Approvals in June for loans other than house purchase or re-mortgaging continue to be stable, reflecting lower available equity or homeowners reluctant to take on extra borrowing.
BBA statistics director, David Dooks said:
“Second quarter GDP is expected to have strengthened and as economic conditions improve the banks are providing the finance to help growth. In June, £9 billion of new mortgages and a small rise in consumer credit were accompanied by a net increase in lending to businesses.
”However, household savings, though still growing at 5%, seem to be slowing.”
Jonathan Harris, director of mortgage broker Anderson Harris, says:
"The mortgage market continues its upward trajectory with borrowers tempted to take the plunge by lower rates and easing criteria. Help to Buy has already made a flying start in its first four months, according to house builders, and is expected to give first-time buyers, as well as second steppers a boost from January when the guarantee element of the scheme is rolled out. We eagerly await further details of the pricing of the second stage of the scheme with the Chancellor meeting lenders and house builders today.
"We expect mortgage rates to continue to be extremely competitive in coming months as a result of Funding for Lending and lenders continuing to vie for business.
"Borrowers who can afford to do so continue to overpay on their mortgages, taking advantage of record low interest rates, and pay down debt where they can. This makes sense - why leave savings languishing in accounts paying such poor rates of interest when you can reduce your borrowing? There is also a reluctance to take on extra borrowing because of the uncertain economic and jobs climate. Confidence may be improving but it still has some way to go.
"While lending volumes continue to improve each month, we remain some way off a sustained recovery in the housing market as caution continues to prevail."
