The BBA’s High Street Banking Statistics for May 2015 showed that mortgage approvals have been steadily improving over the past five months. The number of house purchases in May was very similar to the underlying trend a year ago.
Unsecured borrowing is growing at an annual rate of 5%, the highest rate since autumn 2010, reflecting strong consumer confidence.
BBA chief economist Richard Woolhouse said robust household borrowing is indicative of the wider recovery we’re seeing in the economy.
“The increase in mortgage approvals this month is consistent with the trend we’ve seen since the start of the year. The numbers show that the property market remains buoyant after the general election. Fierce competition between lenders means that there are some great mortgage deals available from the high street banks,” he said.
“Personal borrowing by British families also seems to be strong – the uptake of personal loans and credit card borrowing is further proof of consumers’ confidence.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said that confidence in the housing market is riding high but warned that a rate hike could be on the horizon.
“Borrowers have been taking advantage of record low mortgage rates. The slight cloud on the horizon is rising swap rates as the prospect of an interest rate hike becomes more likely. Subsequently, it’s fair to say that we have probably seen the low point with fixed-rate products likely to edge up over the coming weeks and months,” he said. “However, borrowers shouldn’t panic as any rises will be moderate. With lenders continuing to struggle to meet volume targets, much of the underlying increase in swap rates will be absorbed in lower lender margins.”