The numbers of approvals for house purchase and remortgaging continued the stronger pattern seen since the turn of the year and were some 31% and 40% higher, respectively, than equivalent months last year. Assistance schemes for mortgage lending are also helping more first-time buyers and housing chains generally.
Approvals in July 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:
“Mortgage activity has strengthened during 2013 with the help of Government schemes but high repayments and redemptions mean, however, that we are not seeing increases in net mortgage borrowing for the high street banks.
“Consumer credit growth rate has also risen this year but increased credit card borrowing has reduced the use of personal loans.”
Jonathan Harris, director of mortgage broker Anderson Harris, says:
"The mortgage market continues to improve as buyers and those remortgaging are attracted by lower rates and easing criteria. Help to Buy is helping first-time buyers and is expected to give a further boost to this group, as well as second steppers, from January when the guarantee element of the scheme is rolled out. Funding for Lending is resulting in ever-lower mortgage rates, while the Bank of England's comments on forward guidance suggest interest rates are unlikely to rise for a couple of years at least, further instilling confidence.
"One trend which shows no signs of abating is that borrowers who can afford to do so continue to overpay on their mortgages, taking advantage of record low interest rates, and are paying down debt where they can. This is sensible: why leave savings languishing in accounts paying poor rates of interest when you can reduce your borrowing? While confidence may be growing in the housing market, there is a reluctance to take on extra borrowing while we still have an uncertain economic and jobs climate.
"While lending volumes are improving, we remain some way off a sustained recovery in the housing market as caution continues to prevail and transactions are far lower than they were at the height of the boom years. However, mortgage brokers and estate agents are still reporting a high level of enquiries and we expect these to continue to feed through to improved official figures in coming months."
Jeremy Duncombe, Director, Legal & General Mortgage Club, comments:
“It’s a sure sign of improved confidence in the market that lenders have a bigger appetite to lend, and it’s a great time for the consumer to take advantage of historically low rates in the knowledge that Mr Carney expects rates to remain low for some time to come. As lending figures increase, recent CML figures have also shown that more people are looking to mortgage brokers for advice with their biggest purchase. Intermediaries accounted for to 57.5% of all mortgages in Q2 – up from 53.5% in Q1 – highlighting the importance of the sector.
“Lenders are increasingly recognising the value of an intermediary to deliver the volume, quality and cost effectiveness that they need, as they look to grow their gross lending on the back of the recent FLS and Help to Buy initiatives.”
Duncan Kreeger, director of peer-to-peer bridging lender West One Loans, comments:
“Half a decade of banks plodding along in first gear is not progress. Growth in UK businesses will have suffered as a result of the withdrawal of more than £3 billion pounds in support – at exactly the time when they need to invest in the future. It’s very difficult for SMEs to expand without investment, no matter how successful they are. In the wider economy, these smallest firms form the advance guard – the nimblest and most entrepreneurial, that should normally be able to turn on a sixpence when new businesses comes in. SMEs are the scouts for a proper economic recovery. But mainstream banks are standing in their way.
“That’s why alternative finance is growing at such an astounding pace – to supply their non-financial counterparts. Peer-to-peer lending will soon be worth billions on its own, while short-term secured loans are already worth nearly £2 billion a year. Today’s news from the BBA is just another announcement heralding the decline of old-style banks. New finance is progressively confining the age-old “banker says no” story to history."
