BBA: Mortgage approvals trend upwards

Sarah Davidson

May 28, 2015

The latest numbers from the British Bankers’ Association showed gross mortgage borrowing in April was £10.5bn – 13% lower than in the same month last year but 2% higher than in March.

Although seeing slower demand in the second half of 2014, the overall mortgage stock is now 1% higher than a year ago.

Monthly house purchase approvals are trending upwards and April was 3% higher than in the same month last year, possibly influenced by the introduction of the Land and Buildings Transaction Tax in Scotland, said the BBA.

Remortgaging and other approvals also increased in April and are some 6% higher and 7% lower respectively than a year ago.

Approvals overall were therefore higher than in March and some 3% higher than the same time a year ago.

Unsecured borrowing is growing at its highest annual rate, of 4.9%, since autumn 2010, reflecting strong consumer confidence.

Richard Woolhouse, chief economist at the BBA, said: “British businesses and consumers have started to put their foot on the gas. There appears to be broad confidence about the economy, which the banks are supporting through affordable credit, leading to rises in borrowing across the board.

“Business lending has risen in three of the first four months this year indicating that we might have reached a turning point. There was a significant pre-election jump in mortgage approvals which we would expect to continue in the coming months.

“There was a sharp rise in the amount savers deposited in their bank accounts and also in the amount people are borrowing through personal loans and credit cards. This suggests that consumer spending will continue to drive the British economy forwards.”

Matthew Pointon, property economist at Capital Economics, said: “According to the BBA, mortgage approvals in April saw their largest rise since September 2013 but while the strong economic backdrop will allow lending to continue to grow steadily, depressed new buyer demand and tougher mortgage regulations will prevent that recovery from becoming another boom.

“These numbers put paid to concerns that uncertainty over the general election would derail the nascent recovery in lending – a fear we always felt was overplayed. But by the same token, that also means a significant post-election bounce in approvals is unlikely.

“Other factors also indicate that the mortgage market is not set to take-off as it did in the second half of 2013. A lack of available stock continues to dissuade buyers from the entering market. While the latest new buyer enquiries balance was just about positive in April, based on past form its current level points to an easing in the growth of mortgage approvals.”

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