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.
Gross mortgage borrowing of £11.1 billion was 15% higher than in August last year. The overall mortgage stock continues to rise in response to stronger demand and is1.4% higher than a year earlier.
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.
Compared to the same time a year earlier, approvals in August 2014 were up 5% for house purchase and down 16% for remortgage.
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.”
Brian Murphy, Head of Lending at Mortgage Advice Bureau, comments:
“Despite August traditionally being a quieter period for the mortgage market, increased confidence among lenders and consumers shone through, resulting in a 15% annual boost in mortgage lending. Healthy competition between lenders means that consumers can take advantage of preferential rates, while MAB data shows that more than 12,000 products were available on the market in August: a post-credit crunch record high for consumer choice.
“While the remortgage market has not yet seen the same level of recovery as purchase loans – with overall remortgaging levels down on last year – we can expect to see activity increase as interest rate rises edge closer, making locking into a low rate deal at the top of consumers’ priorities. Although as many as three million consumers have been unable to remortgage due to low equity or worsened financial circumstances, rising house prices and improved employment prospects should also return many of these ‘silent prisoners’ back to the remortgage market.
“As the new rules introduced by the Mortgage Market Review bed in, independent mortgage brokers will play an increasingly vital role in handling rising mortgage activity. Brokers can offer consumers a whole-of-market view and are able to successfully navigate them through the more demanding requirements and financial evidence required by MMR, speeding up the application process and ensuring they find the best product for their circumstances.”
