Net borrowing of £2.0 billion was the highest monthly rise since August 2010.
The number of mortgage approvals in August was 23% higher than a year ago, with remortgaging up 38% – at its highest level for four years – and house purchase up 16%. Existing borrowers are seeking fixed rates to control their mortgage costs, while market competition is also producing attractive deals for new buyers.
Bank lending to companies increased in August but continues to be subdued overall. Capital market finance has grown by £11.5 billion in 2015 so far, with larger companies using it as an alternative to loans and overdrafts.
Richard Woolhouse, Chief Economist at the BBA, said:
“People are putting their money into bricks and mortar while interest rates are low and the timing of a likely rate rise remains uncertain.
“Mortgage borrowing continues to pick up. The August increase is the largest in five years, although borrowing is still some way below pre-crisis levels.
“Remortgaging numbers also continue to be strong, as shrewd homeowners snap up competitive deals.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, says:
"‘Despite August tending to be one of the quieter months for the housing market, this one saw the largest increase in borrowing for five years. That said, borrowing is still some way below pre-crisis levels, suggesting a more moderate and sustainable housing market.
"Lenders are keen to lend, resulting in some very competitive mortgage deals. The mortgage market remains over supplied with lenders having more money to lend than there are people looking for home loans. This means criteria will have to loosen and rates will have to remain low to ensure lenders hit their volume targets.
"So despite fears of an interest rate rise next year, there is still some excellent pricing on fixed rates, with five-year deals available at less than 2.5 per cent. Such deals are boosting the popularity of remortgaging and we expect this to continue during the autumn.
"For many, the main issue is not so much finding a cheap mortgage rate but being able to prove affordability to satisfy the lender and meet tighter criteria post Mortgage Market Review."
