Mortgage lending continues to improve

But its latest trends in lending report added that the annual rate of growth in the stock of lending to UK businesses remained negative in the three months to February.

Since the start of the year, the Bank’s measures of quoted rates on 2-year fixed-rate mortgages have been little changed, though rates on 5-year fixed-rate mortgages picked up slightly.

Quoted rates on new personal loans fell by around 50 basis points in 2014 Q1 compared to the previous quarter.

Over the past year, credit availability had eased for firms of all sizes and all sectors, according to a survey by the Bank’s network of Agents. Demand for credit across all business sizes increased in 2014 Q1, according to respondents to the Bank of England’s Credit Conditions Survey.

Lenders in the Credit Conditions Survey reported that the availability of secured credit to households increased for the seventh consecutive quarter and demand for house purchase increased in 2014 Q1.

Stephen Johnson, MD of Commercial Mortgages at Shawbrook Bank, said: “Lending to small businesses is critical to the country’s economic recovery and it’s disappointing to see that lending still hasn’t picked up significantly.

“In part this is due to an on-going lack of awareness among some SMEs about alternative sources of finance.

“The government’s support of the specialist banks is very encouraging but we should all continue to spread the word that there are options beyond the high street.

“Brokers are key to giving borrowers an overview of the market and can help to educate small businesses that there are banks like us with a real appetite to lend.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The volume of mortgage lending continues to rise as more buyers take advantage of the cheap rates available to get on the housing ladder or move up it.

“However, while transactions are much higher than a year ago across most of the country, they are still below pre-recession levels so the recovery still has some way to go.

“Two-year fixes were largely unchanged in the first quarter but five-year fixes have started to edge up, partly as a result of higher Swap rates which have doubled in the past year.

“However, there are still five-year deals pegged at around 3% for those with sizeable deposits, which is excellent value.

“Help to Buy is having a significant impact on the number of higher loan-to-value deals now available, with lenders expected to do more lending at higher LTVs in coming months.

“With the new mortgage rules now introduced, we expect to see a slowdown in mortgage processing, particularly where borrowers go direct to the lender. However, once the new rules have bedded in and any glitches are ironed out, the market should continue to perform strongly for the remainder of the year.”

And David Whittaker, managing director of Mortgages for Business, said: “Remarkable growth in mortgage lending is just one of many good omens signalling an about-change in the UK’s economic prospects. But a new era of optimism will mean a new era for interest rates.

“And the faster we shift back towards prosperity, the sooner the likes of Mark Carney will be eyeing a return to a more normal base-rate policy.

“At the current rate of knots, we expect the Bank of England to raise the base-rate early next year – and certainly before the next general election.

“Such a move could have a very real effect on household finances, especially for the unprepared.

“A few mortgage products are already starting to become a little pricier, and in the next twelve months that trend will accelerate. We’re already advising landlords to find a five year fixed rate deal – and for many homeowners too, it may be wise to switch to a fixed rate deal sooner rather than later.”