On an annual level, gross mortgage borrowing from BBA members totalled £138bn in 2015, an increase of 6% compared to the previous year.
Eddie Goldsmith, chairman of the Conveyancing Association said there has been a considerable rush to secure mortgage finance, particularly by landlords, in order to complete by 31 March and save on Stamp Duty Land Tax (SDLT) costs.
In the Autumn Statement, the Chancellor announced a 3% surcharge which will apply to second homes and buy-to-lets from 1 April.
Mortgage borrowing and approvals will continue to show an upward trend during Q1 2016, but a ‘tail-off’ in demand may occur once the SDLT premium kicks in, Goldsmith said.
“Indeed, landlords are already having to make judgement calls about whether they will be able to complete their purchases before the deadline and, over the next few weeks, we may well see more landlords pulling out of purchases because of an inability to do so. This will clearly have an impact on mortgage approval numbers, borrowing levels and will also have a considerable knock-on effect to all those who were ‘sitting’ within those property chains,” he said.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said cheap mortgage rates have helped fuel the growth in lending seen throughout last year, with challenger banks keen to lend helping push rates down to record lows.
As interest rates are unlikely to rise anytime soon, the low rates are expected to continue, but it will probably be the end of the very cheapest deals, he added.
House purchase approvals also increased by 19% to almost 44,000 during this period. The value of approvals for house purchases in December 2015 totalled £7.8bn. The average approval value was £177,000.
Remortgaging approvals were 31% higher than the previous year, reaching 23,764 approvals to a total value of £4.2bn. The average approval value was £178,700.
“Remortgaging numbers moderated in December and are unlikely to surge in coming months as comments from the Bank of England suggests that a rate rise is off the agenda at least for now. Often it is only once rates start rising that homeowners feel an urge to remortgage, and often after two or three rate rises that they actually get round to it,” said Mark Harris.
Adrian Anderson, director of mortgage broker Anderson Harris, said: “While December finished with a strong performance on the lending front, January has also got off to an unseasonally good start as those investors and second homebuyers keen to beat the stamp duty hike from April have only really got until the end of February to secure a mortgage. They may have to accept that they won’t get a market-leading rate as they will need a lender who can perform quickly.”
