The rise has been attributed to a Bank Rate rise appearing less imminent, and the continuing drop in fixed rates.
The MLAR data found that average interest rates on gross advances decreased by 5 bps in Q4 2015 to 2.71%, the lowest rate since the series began in 2007. The decrease was driven by a drop in fixed rates of 7bps to 2.72%, partially offset by an increase in variable rates of 3bps to 2.63%.
The interest rates on total amounts outstanding dropped by 4bps to 3.07% in Q4 2015, again the lowest since the series began. This was due to a decrease in the average fixed rate of 8bps to 3.14%, and a decrease in the average variable rate of 1bp to 3.00%.
Gross advances of £63.1 billion were recorded in Q4 2015 - 1.6% higher than in Q3 2015 and 22.8% higher than Q4 2014.
Net advances increased from £8.1 billion in Q4 2014 to £14.2 billion in Q4 2015.
The proportion of lending to first time buyers increased in the quarter by 0.5 percentage points to 20.9%. The value of residential loans advanced to FTBs increased by £2.0 billion from Q4 2014 to £13.2 billion in Q4 2015.
Lending to borrowers with a single income multiple of more than 4.00x increased by 0.5% to 10.2% in Q4 2015.
However lending at a loan-to-value of over 90% decreased by 0.1 percent points over the quarter to 3.2%.
The buy-to-let proportion of lending increased from 15.6% in Q3 2015 to 15.9% in Q4 2015. BTL lending also increased by 1.0 percentage points from Q4 2014.
BTL advances (which include BTL remortgages) increased over the past year from £7.7 billion advanced in Q4 2014 to £10.0 billion in Q4 2015 which is the highest since 2007. BTL balances outstanding were £178.2 billion in Q4 2015, which, at 14.7% of total residential balances is also the highest proportion since the series began.
The proportion of remortgages increased from 24.1% in Q3 2015 to 25.0% in Q4 2015.
Jeremy Duncombe, Director, Legal & General Mortgage Club, commented:
“The buy to let sector saw a strong end to last year, and despite the tax changes coming into effect in April, we would expect this trend to continue into 2016. With investors having few alternatives that offer significant returns, many will still to look to the housing market for long term growth.
"Interestingly, lending on products with an LTV of 90% or over was slightly down compared to the previous quarter, showing that lenders’ risk appetite’ don’t seem to be increasing. This doesn’t improve the positions of first time buyers and those with smaller deposits looking to take a step onto or up the property ladder, but who may be struggling to save the large sums required to buy in a demand-centric market.
"Inadequate housing supply therefore remains the core issue at the heart of the market. With demand dwarfing supply, house prices are ever inflating, pricing many buyers out of home ownership. Until this problem is addressed in a long term, meaningful way, the market simply cannot return to full health.”
