Gross mortgage borrowing highest since 2008

“It is good to see such a significant year-on-year rise in lending as more people look to invest in a property," Adrian Whittaker, New Street Mortgages

Gross mortgage borrowing of £13.6bn in January was 38% higher than a year ago and the highest since mid-2008, figures from the British Bankers’ Association revealed this morning.

The number of mortgage approvals in January was 33% higher than a year ago, with remortgaging up 42% and house purchase up 27%.

And borrowing by non-financial companies increased fairly strongly in January, after declining in December, particularly in the transport, storage and communication and construction sectors.

Richard Woolhouse, chief economist at the BBA, said: “The start of the year has seen a significant rise in mortgage borrowing. It seems that this has been driven, in part, by borrowers looking to get ahead of the increases in stamp duty for buy-to-let and second home buyers scheduled to come into effect in April.

“Net lending to non-financial companies saw the biggest monthly jump since July 2008 as businesses take advantage of record low interest rates. Demand from the transport, storage and communication and construction sectors was particularly strong.”

Adrian Whittaker, sales director, New Street Mortgages, added: “It is good to see such a significant year-on-year rise in lending as more people look to invest in a property.

“However, with rising competition for a limited supply of housing borrowers and brokers need to be certain of a lender that can process a mortgage as swiftly as possible.

“Mortgage lenders need to be sure that the lending process does not become the bottleneck for consumers as they compete with other buyers to secure a property.

“It is crucial that as an industry we support brokers in this race, updating our propositions with the latest technology and digitising documents to give intermediaries the surety and speed they want when it comes to finding their client the right mortgage.

“Those that fail to adapt to digital will find their businesses disrupted by lenders that have embraced technology to streamline the mortgage application.”

Richard Sexton, director of chartered surveyor e.surv, said: “Mortgage lending levels keep moving in the right direction – encouraging more people to take advantage of the house purchase funding options on offer and make the leap onto the property ladder.

"Delayed interest rate hikes, continually low inflation and higher employment have all brought an element of stability into the market, but it’s not all smooth sailing ahead – stamp duty changes are creating uncertainty, particularly for the buy-to-let sector.

"Speculation on the outlook for this sector is causing a knock-on in lending. Ahead of looming tax changes, buy-to-let lending is enjoying a boost. Post April, the sector will no doubt persist but there is a degree of thoughtfulness among prospective landlords.

"And it’s not all about buy-to-let. Homeowners seeking a second home will also be affected. These impacts appear to have created a short term uplift in related buying activities.”