The August 2015 mortgage market grew to a seven year high as buyers and people remortgaging returned to the market, according to the British Bankers’ Association.
A total of £12.22bn was advanced during the month, the highest amount since August 2008, according to the British Bankers’ Association (BBA).
Net lending, which strips out repayments and people switching to a new deal, also hit a five-year high of £1.96bn.
Tighter rules on mortgage lending took effect last year, requiring banks and building societies to make more rigorous checks on whether borrowers could afford their loans. The number of approvals fell throughout most of 2014, cooling house price growth and easing concerns about a bubble in the housing market.
Mortgage advances had a subdued start to the year, with net lending hovering around the £500m a month mark.
But advances began to take off in May once the uncertainty ahead of the General Election was removed, with net lending rising to £1.34bn, and increasing every month since.
Strong mortgage market conditions set to continue
The market looks set to remain strong going forward, with the number of mortgages approved increasing across all categories. The number of loans in the pipeline for people remortgaging jumped to 25,540 in August, the highest level for four years and 38 per cent above the figure for the same month of 2014. The BBA attributed the surge to people taking out fixed rate mortgages to control their monthly repayments once the Bank Rate starts to rise.
Mortgage approvals for house purchase rose by 16 per cent compared with a year early to stand at 46,743, the highest level since February last year. The slightly more subdued increase in pipeline loans for house purchase compared with remortgaging is likely to reflect the shortage of properties that are currently for sale.
Richard Woolhouse, chief economist at the BBA, said: “People are putting their money into bricks and mortar while interest rates are low and the timing of a likely rate rise remains uncertain.
“Mortgage borrowing continues to pick up. The August increase is the largest in five years, although borrowing is still some way below pre-crisis levels.
“Remortgaging numbers also continue to be strong, as shrewd homeowners snap up competitive deals.”