Gross mortgage borrowing of £9.7bn in September was higher than in August and above the average of £8.7bn over the previous six months. 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 both rose in September, with house purchase the highest since December 2009 and remortgaging the highest since October 2011. Assistance schemes for mortgages, such as the recently-announced second stage of Help to Buy, are helping first-time buyers and housing chains generally as housing market activity rises. Approvals in September for borrowing other than house purchase or re-mortgaging are in line with those seen during rest of the year.
New credit card spending of £8.3bn in September was higher than the recent monthly average. Personal loans and overdraft net borrowing is contracting less than over the previous 6 months, because demand for overall unsecured credit is starting to increase. Demand is being stimulated by improving consumer confidence and the range of competitive offers available.
There was a strong increase in total non-financial business borrowing levels in September but annual growth overall continues to contract. Within that, however, SME borrowing levels are stable.
BBA statistics director, David Dooks said:
“September’s figures build on the growing picture of improved consumer confidence, with stronger gross mortgage lending, rising house purchase approvals and increased consumer credit.
“Business borrowing rose by £2.5bn net in September, the strongest monthly rise since 2009, reflecting increased demand from wholesalers, retailers and utility companies.”
Adam Tyler, CEO of the NACFB commented:
“High-street lenders remain very selective in granting finance which is stifling small businesses and slamming the brakes on economic growth, particularly jobs and wages. With no underwriting for their potential losses, high street lenders are still reluctant to support SMEs – leaving many choked of funds they need to make their ambitions a reality.
“Alternative options from leasing and asset finance to peer-to-peer lending are taking up the slack and plugging a vital gap. SMEs need to be encouraged to seek alternative forms of finance, and the pick-up in lending activity through commercial brokers shows a growing awareness and understanding of the available options. The job is far from done, however, and we need a collective effort if the UK is to adequately support entrepreneurship, boost job creation and achieve a full and permanent recovery.”
Lea Karasavvas, managing director of Prolific Mortgage Finance, said:
"In September and October, the mortgage market has been absolutely booming. Activity-wise, the last time the market was like this was 2006. The Funding for Lending Scheme was the trigger and, coupled with the recovering economy, has seen lenders relax their criteria, compete on product and commit to larger loan volumes.
"The autumn is usually a busy time in the property market but this year it is astronomically busy. With rates for first time buyers below 4% and two year fixed rates now half of what you're paying on a variable rate, it's no surprise there is more activity. People are making the house move they've wanted to make for years and are remortgaging onto what they sense to be once-in-a-lifetime mortgage rates. It's not just London that is seeing a sharp rise in activity. House purchases and remortgages are improving all around the country.
"Clearly there's a worry that the property market is starting to overheat. In the case of the capital, it's certainly hot but in the rest of the country there's a long way to go yet. With supply an issue in London, there is, to some extent, a glass floor under prices."
