House purchase approvals are trending upwards, as consumers take advantage of competitive prices in the mortgage market, although lending activity is still down on this time last year.
Meanwhile unsecured borrowing stands at its highest annual growth rate since autumn 2010, reflecting improved consumer confidence.
Richard Woolhouse, chief economist at the BBA, said: “We’re starting to see signs that businesses from many sectors are starting to borrow more from their bank. While it’s still too early to predict, these figures and the latest data from the Bank of England suggest that business borrowing has turned a corner.
“Savvy savers appear to be continuing to take advantage of good deals, such as pensioner bonds, which is why we’re seeing weaker bank deposits.”
But Patrick Bamford, director, mortgage insurance europe for Genworth, added: “Despite the government initiatives currently on offer, both gross mortgage borrowing and house purchase approvals in March remain down from last year.
“This is partly down to the lack of certainty in the lead up to one of the most unpredictable elections in living memory. The positive news is that housing is high on the agenda for all parties, but whoever takes power after 7th May needs to provide a permanent solution to the challenges facing the long term sustainability of the housing sector, especially for first-time buyers.
“Government policies such as Help to Buy and the Help to Buy Isa are a step in the right direction, providing a much needed boost to hopeful first-time buyers, but remain only a short term fix and do not go far enough to solve the problems within the housing market. When the mortgage guarantee expires, the government must not allow lender activity to fall back to levels seen after the financial crisis, when high LTV loans were few and far between, even for the most prudent borrowers.
“The UK housing market needs a permanent solution like private mortgage insurance, which can support a permanent return to ‘normal’ levels of high loan to value (LTV) lending, something the Help to Buy scheme cannot do.”
Richard Sexton, director of e.surv Chartered Surveyors, said: “You can’t blame Britain’s prospective homeowners for being cautious. Housing has become a hotly contested political issue. Amid a storm of assertions and finger-pointing, many buyers are laying low to see what happens. Despite this understandable damping effect, many prospective homebuyers are taking advantage of the unique opportunities provided by low interest rates and a mortgage price war between the major banks. However, the modest growth in house purchase approvals is welcome in the face of election uncertainty.
“The keystone of house purchase approvals has been cemented in March, topping off a series of successful climbs across Q1 2015. It is hoped that the bedrock is laid for a solid comeback, but right now, homebuyers’ future lies in the hands of the politicians until the deal is sealed on 7th May. The job is far from finished. We’re below the volume of house purchase approvals we saw last year – but demand is clearly there and clearly building.”