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Gross mortgage lending climbs to six-year-high: BBA

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  • 26/04/2016
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Gross mortgage lending climbs to six-year-high: BBA
Gross mortgage lending hit £17.1bn in March, 64% higher than the same month in 2015, the latest figures from the British Bankers' Association (BBA).

A sharp increase in buy-to-let and second home purchases ahead of the introduction of the Stamp Duty surcharge led to the significant year-on-year increase, which is also the highest level of borrowing seen since April 2008.

Dr Rebecca Harding, chief economic advisor at the BBA, said consumer confidence also contributed to the increase in lending.

“For households more widely, consumer credit continues to grow above real earnings growth, as improving consumer confidence and low interest rates combine to stimulate borrowing demand for personal loans, cards and overdrafts,” said Harding.

She added: “Business borrowing is moderating within distribution, manufacturing, food and accommodation sectors, as large corporates use capital markets for their funding and both large and small businesses continue to build up deposits.”

The number of mortgage approvals in March was 20% higher than a year ago, with remortgaging up 25% and house purchase up 14% while unsecured borrowing by households grew at around 6% a year reflecting low interest rates and relatively strong household finances.

Adrian Anderson, director of mortgage broker Anderson Harris, said figures for April and May should be more subdued as transactions were rushed in to beat the Stamp Duty deadline.

“However, Stamp Duty hikes aside, borrowers on the whole exude confidence, household finances are relatively strong, interest rates seem unlikely to rise anytime soon and lenders have plenty of money to lend,” he said. “Remortgaging is also on the up as borrowers realise that while base rate is unlikely to rise soon, mortgage rates are just so cheap that they are too good to miss.

“The flood of buyers we saw in March will not necessarily be replaced in the short term while for many borrowers, tougher affordability criteria is still a barrier to getting a mortgage or remortgaging.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said there were potential hiccups on the horizon, such as the EU referendum, but that it will be business as usual for most going forward.

“The challenger banks are keen to lend with lenders such as HSBC and Tesco Bank using brokers for the first time, while more established lenders also wish to bring in more business, which will be reflected in cheap rates and some tweaking of criteria,” said Harris.

“On the buy-to-let side, lenders will need to adapt to lending to limited companies as it looks as though an increasing number of investors will go down this route.”

 

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