Year-on-year, new mortgage lending is 15% higher and approvals for house purchase have risen by 5%, but annual comparisons have been slowing in recent months and re-mortgaging and equity release are below last year.
Though approval processes were temporarily disrupted by the implementation of the Mortgage Market Review in early 2014, recent figures suggest a stable overall picture of approval numbers.
The report also shows that this year’s saving in ISAs and NISAs is running below investment levels over the same period last year. With the change to ISA rules, July saw £4.9 billion invested and there was a further £1.5 billion in August. However, total inflows in the year-to-date of £9.3 billion are below the £11.0 billion in the equivalent period of last year.
Higher unsecured loan demand continues to reflect rising consumer confidence and improving household finances. Net borrowing through personal loans and overdrafts is showing rising annual growth after contracting for a long period.
David Dooks, Statistics Director at the BBA, said:
“When customers feel more optimistic about the economic outlook they are much more likely to take on new borrowing.
“Today’s figures show that mortgage lending in August was up 15% on last year and that credit card spending remains robust. But I was particularly struck that after years of decline demand for unsecured personal loans is rising quite strongly again.
“Those products are often used to finance bigger purchase such as cars or major home improvements – the sort of spending we often put off until we feel confident about our financial circumstances.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said:
"Mortgage approvals for house purchases fell nearly ten per cent year-on-year in September, clearly reflecting the slowdown in the housing market. While the market may be taking a breath, now is a very good time indeed to get a mortgage.
"The mortgage market review slowed applications down and lenders are playing catch-up before the end of the year. They also want to create a strong pipeline for 2015.
"Swap rates are very low and are driving record low fixed-rate mortgages. Margins are tightening as lenders compete for business, preferring to cut rates rather than ease criteria and offer more flexible underwriting. Some borrowers will therefore still find it tough to get a mortgage, particularly if they require interest only, are an older borrower or are self-employed."
Richard Sexton, director of e.surv chartered surveyors, comments:
“The changes introduced in the Mortgage Market Review took a few months to settle down. But looking ahead, the road looks steady. We are still a way off where we should be, but there are reasons to be optimistic.
“First-time buyers are the backbone of the UK’s mortgage market and the foundation on which the mortgage market’s post-recession recovery has been built. But after an extended period of flat wages, low interest rates and high inflation, many of them are still struggling to save for a deposit. Help to Buy has provided a route around that barrier. It is enabling worthy, responsible borrowers – many of whom are being held back from the property market by the economic downturn – a chance to get onto the ladder regardless.
“Help to Buy has stirred new vigour into much of the dormant property market, waking up many regions from housing market hibernation. We are now seeing areas of the country previously forgotten in the property market recovery experiencing a surge in demand, largely thanks to Help to Buy. Young, low income and first time buyers are now looking for first homes across the country, taking advantage of lower house prices in much of the UK.”
