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 August, with house purchase the highest since 2009 and remortgaging the highest since 2011. Assistance schemes for mortgage borrowing are also helping more first-time buyers and housing chains generally as housing market activity continues to increase. Approvals in August for borrowing other than house purchase or re-mortgaging are in line with those seen during rest of the year.
BBA statistics director, David Dooks said:
“These figures suggest that consumer confidence is growing. For the first time in four years, annual growth in household borrowing on credit cards and personal loans has turned positive and mortgages approved for house purchase are also at their highest level since 2009.
“Business borrowing, influenced by large corporates using alternative market funding, again contracted, but within that, SME borrowing is stable.”
Paul Hunt, managing director of Phoebus Software said:
“This morning’s figures illustrate that the mortgage market is turning a corner. It’s hugely significant to see that for the first time in four years, annual growth in household borrowing on credit cards and personal loans has moved into positive territory and mortgages for house purchase are at their highest level since 2009. Lending levels are up, due to the government’s initiatives such as the Help to Buy scheme and the Funding for Lending Scheme, which have sent waves of confidence across the board.
"Despite previous market volatility, it seems there’s a good chance the mortgage market will see even greater activity in coming months. Funding conditions have been transformed as reflected by the falling rates and higher numbers of mortgage approvals recently. Lenders are supporting the market’s growth, thanks to their proactive approach to lending and willingness to help a wide range of borrowers.”
Jeremy Duncombe, Director, Legal & General Mortgage Club, said:
“Clearly confidence continues to grow in the mortgage market. Lenders are showing a greater willingness to lend and many ‘appropriate’ borrowers that may have found themselves frozen out are now finding they have access to funding. It seems that much of this business is being channelled through intermediaries too with latest CML figures showing advisers accounted for 57.5% of all mortgage transactions in the UK in Q2 2013, up from 53.5% in Q1. Clearly this is a good start but greater innovation from lenders when it comes to products is still needed to build a new sustainable and stable market place.”
Yasin Patel, director of peer to peer mortgage lender Mayfair Bridging, commented:
"Activity throughout the summer months has been surprisingly buoyant. First time buyer activity has been particularly encouraging, aided by schemes such as Funding for Lending and Help to Buy, which have made mortgage finance cheaper and easier to access. There are still plenty of very attractive mortgage deals out there, and buyers are now more confident that the base rate will stay where it is for a little while longer.
"As a result, we are seeing a lot more buyers committing, whereas a year ago they were taking a wait-and-see approach. We shouldn't kid ourselves though - mortgage activity isn't anywhere near pre 2008 levels. But the housing market definitely seems to have turned a corner. It will be interesting to see whether the summer spurt has continued into September, which is historically a busy month for house purchases as families return from their holidays.
"It's probably too early to say that all is well in the housing sector again, but it's certainly looking a lot brighter than it has done for a couple of years."
Mark Harris, chief executive of mortgage broker SPF Private Clients, says:
"Consumer confidence continues to grow, with more buyers committing to new mortgages. Lower rates and easing criteria are proving attractive, while government-assisted schemes such as Help to Buy are propelling more first-time buyers onto the housing ladder.
"However, it is encouraging that many borrowers continue to overpay on their mortgages, taking advantage of low interest rates and paying down debt where they can. Confidence may be growing in the housing market but homeowners are reluctant to take on more borrowing while there is still uncertainty with regard to the economic and jobs' climate.
"Despite talk of a housing bubble, the reality is that we are some way off a sustained recovery, with transactions at far lower levels than at the height of the boom years. However, mortgage brokers and estate agents are reporting high levels of enquiries in September so we expect these to be reflected in improved official figures in coming months."
