Mortgage approvals up 24% for December, say BBA

The number of mortgages approved in December was 24% higher than the same period a year ago, according to data published by the British Banking Association (BBA).

The report also states that mortgages for house purchase are up 19% and remortgages up 31%. The data also states that the use of credit cards decreased, with the value of goods bought on credit down 3% compared with December 2014.

Richard Woolhouse, Chief Economist at the BBA, said: “Last year was a strong year for household borrowing. There was a 6% rise in mortgage borrowing compared to 2014 and consumer credit expanded at more than 5% annually within an overall unsecured market which is growing at nearly 10% annually.

“Over the last few years businesses have been reducing their bank borrowing partly by deleveraging or by refinancing debt through capital markets; 2015 saw business lending other than construction and real estate move into positive annual growth.”

Eddie Goldsmith, Chairman of The Conveyancing Association said: “The figures for December from the banks appear to show a strengthening of the mortgage market as 2015 ended with December’s mortgage borrowing figures up by 24% on the same month in 2014, and up by 6% overall in 2015 compared to the previous year.

“The fact that mortgage approvals were 24% up in December, compared to December 2014, is also a sign of the growth during that 12-month period. Anecdotal evidence, and the testimony of our members, suggests that January has continued where December left off; indeed with the anticipation of higher stamp duty charges from April, there has been a considerable rush to secure mortgage finance, particularly by landlords, in order to complete by the 31st March and save on the stamp duty costs.    

“One can therefore expect that mortgage borrowing and approvals will continue to show an upwards trend certainly through the first quarter of 2016. However, what comes after this point is pure conjecture at present, given the tail-off in demand that may occur once the 3% extra stamp duty charge kicks in. 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 this.

“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.”

Richard Sexton, Director of chartered surveyor e.surv said: “Mortgage lending grew significantly over the course of last year, but two main drivers of the gross total – remortgaging and buy-to-let – have challenges in 2016 as some speedbumps are fast approaching.

“The rental sector will soon be coming face-to-face with extra taxes and Mark Carney signalled yesterday that the Bank of England may further step-in to cool buy to let loans if necessary. Meanwhile for remortgaging, many households have already locked in to lower mortgage rates, and the consensus view appears to be struggling to conceive of rates falling much lower in the immediate future.

“House purchase lending is also now much healthier than a year ago, but supply continues to constrain the number of people that can move home or buy for the first time. There is momentum in the home movers market, but that could start to cool if people can’t find the homes to move into or purchase. So sellers urgently need to be convinced to come to market to avoid losing this momentum”

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