Despite a slowdown in demand and lower approval numbers in the second half of 2014, the overall mortgage stock is 1.5% higher than a year ago.
Despite continuing to slow in December, the number of house purchase approvals in 2014 was 9% higher than the previous year.
Annual growth in unsecured borrowing is running at 3.8% - the highest rate for six years. ISA deposits in 2014 were 57% higher than in 2013, reflecting the increase in investment limits. In the credit card market there were 2.5 billion purchases in 2014, 8% more than in 2013.
Richard Woolhouse, Chief Economist at the BBA, said:
“The mortgage market has been softening since the spring, but for customers taking out home loans right now there are some great deals and we expect the market to begin to grow again this year.
“Robust employment data is making many of us feel more secure in our jobs and optimistic about our futures. That’s now feeding through to personal lending and credit card data, suggesting people are happy to finally replace the car or spend on household improvements.
“Outstanding business lending has been falling as larger firms have used the bond market rather than borrowing from banks. Despite this, outside real estate businesses are generally expanding their lending.”
Adrian Anderson, director of mortgage broker Anderson Harris, says:
"Net mortgage borrowing was slightly higher than in December but down on last January reflecting the slowdown in the housing market in the second half of 2014. Yet lenders are still keen to do plenty of lending so expect mortgage rates to continue to be extremely low, despite Swap rates starting to rise.
"While mortgage pricing is cheap and lenders continue to compete on rate, an unwelcome development over the past few weeks has been the introduction of loan-to-income caps by several banks, with TSB the latest to restrict borrowing to 4.5 times income - down from 5 times - from today. LTI caps are a very blunt tool; the introduction of the mortgage market review and closer attention paid to affordability was supposed to be a more refined model for assessing how much someone can borrow"
Richard Sexton, director of e.surv chartered surveyors, comments:
“Buyers are being pulled in two directions when deciding to buy a house. On the one side, record low mortgage rates mean there are tantalising fixed rate deals now on offer. Meanwhile, minimal inflation – coupled with growing wages – means their pay packets are stretching further, helping them to save for a deposit and to meet monthly repayments. Stamp duty charges have also been slashed for many borrowers.
“However, these positive economic factors can’t counteract the continued problem of rising prices, and lack of affordable housing stock. Any extra cash potential buyers can save is being swallowed whole by property price increases, meaning support for higher LTV borrowers through schemes like Help to Buy is more important than ever.
“Luckily, while these figures may show a lending dip, the proportion of lending to higher LTV borrowers actually picked back up in January, with one in seven borrowers relying on small-deposit mortgages. The General Election is also firmly on the horizon, and the bottom of the ladder in particular will be watching in earnest to see which policies emerge to help them on the housing ladder."
