Gross mortgage borrowing of £10.8bn was 38% higher than in the same month last year, although January was slightly down on December.
Higher capital repayment (in part reflecting homeowners switching lenders) produced monthly contractions in net borrowing through much of 2013, but in the last few 4 months, the overall mortgage stock has started to rise. Mortgage borrowing assistance schemes are helping first-time buyers and housing chains generally, as housing market activity rises.
House purchase approvals were up 57%, with approvals for remortgage up 51% - taking January’s total for house purchase approvals to the highest number since September 2007.
BBA statistics director, David Dooks said:
“Following on from last month, mortgage borrowing continues to rise compared to a year earlier as mortgage assistance schemes help first time buyers and housing chains more generally. Approvals for new purchases have climbed quite significantly and are now at their highest point since September 2007.
“Credit card spending is also on the rise, showing that consumer confidence in the economy continues to improve.”
David Brown, commercial director of LSL Property Services, comments:
“First time buyers looking to get on the ladder will need to catch this swelling wave of lending – but for some that will be easier said than done. Mortgages are certainly more available than a year ago, and for the most part even cheaper – which is excellent news for the property market as a whole. But with a limited supply of homes available rising house prices could be a counterweight to this excitement for many would-be new buyers.
“Yet many potential first time buyers are already benefitting from more lending to landlords. While not a direct step onto the ladder, this is keeping rent rises under control – and currently beneath inflation. A small minority of tenants are paying down any late rent, which is good for all parties. Meanwhile, landlords are also benefitting from rising house prices, and that’s accelerating the growth of plenty of landlords’ portfolios. A healthy rental market is part of the recipe for a healthy property market as a whole – slower rent rises can help prospective first time buyers to build a deposit.”
Duncan Kreeger, director of West One Loans, comments:
“More people climbing onto the property ladder is wonderful news – but we also need more housing for families to move into. While there is some exciting growth from the house building sector – volumes are still lagging behind.
“To really kick start growth, as well as new homes, we need to make better use of existing buildings. Across the UK, scores of commercial properties are lying empty – but can’t be converted to residential use because the right finance just isn’t available. Too many dilapidated properties can’t be transformed into comfortable homes and modern offices – because high street lenders don’t have the capacity to secure complex loans that don’t fit the mould.
“To use space more intelligently, we need more intelligent, modern finance. But lending from the high street banks for property purposes has fallen for another month. Developers and investors need more flexible finance, which is why thousands of deals are leaving the bureaucracy of the mainstream lenders behind in favour of alternative finance.”
