Latest BBA report reveals that mortgage borrowing is booming

Latest BBA report reveals that mortgage borrowing is booming

The latest BBA data has revealed an enormous leap in gross mortgage borrowing - 38% higher than a year ago and the highest since mid-2008.

The report highlighted that the number of mortgage approvals had risen 33% annually, with remortgaging up 42% and house purchase up 27%.

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."

Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), had this to say: “There is plenty of appetite among borrowers and lenders alike in the mortgage market, with January seeing a post-recession high in borrowing. As the BBA suggests, this has been driven in part by a growth in demand from buy-to-let investors looking to access the market ahead of April’s changes to stamp duty. The record low mortgage rates available on the market have also contributed to this spike in activity and have helped encourage borrowers to lock in to very affordable deals.

For those who meet lenders’ criteria and are fortunate to afford a deposit, there have been few times like the present to borrow. Not only are rates extremely low, but consumers can also choose from a huge range of different mortgage products tailored to their individual needs. Recent research from Mortgage Advice Bureau reveals that the number of mortgage products reached more than 17,000 in January 2016 – the highest level seen since 2008*.

Despite the continued growth of mortgage lending to homebuyers, policymakers need to work hard to ensure that first-time buyers and borrowers with modest incomes are supported, and that homeownership is achievable on a wider scale.”

Rob Weaver of property crowdfunding platform, Property Partner, said: "The sharp spike in mortgage borrowing in January was almost certainly a result of the stampede to beat the buy-to-let stamp duty deadline. But in the mad rush to beat the April deadline, are borrowers fully aware of how the government’s tax changes will impact their profits further down the line?
 
In a recent survey of landlords, we found that a startling 27% had little or no awareness of the radical changes coming. The phased withdrawal of mortgage interest tax relief could be a sting in the tail for many buy-to-let investors. Factor in interest rates rising, even by a small amount, and buy-to-let profitability could be decimated as mortgage interest relief is phased out.
 
Anyone investing in traditional buy-to-let at the current time needs to be going in eyes wide open and with complete knowledge of how the forthcoming tax changes will impact their portfolio in the short to medium term."


Richard Sexton, director of chartered surveyor e.surv, comments: “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.”

Adrian Whittaker, Sales Director at New Street Mortgages, commented: “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.
 
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."
 

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Latest Comments

Spencer Fortag
Spencer Fortag 25 Aug 2016

The funny thing is, I mentioned the brick issue in my blog back in April: http://medwayproperty.blogspot.co.uk/2016/04/the-medway-property-market-and-lack-of.html

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SecomTech
SecomTech 19 Aug 2016

Firstly, I either lodge with DPS or do not take a deposit...secondly, If a tenant has not received a confirmation their deposit is secured with either a scheme or in an insured account with an agent/landlord,...

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jasonevans
jasonevans 19 Aug 2016

Belvoir has over 15 years of experience in property lettings, buying and renting and is one of the best agencies I know about. I have heard that they revived an award for the hard work. Really amazing...

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jasonevans
jasonevans 19 Aug 2016

Usually these areas are least affected when it comes to unexpected economical collapse.

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TheWaspNestRemover
TheWaspNestRemover 11 Aug 2016

You agree to pay for the treatment needed to get rid of fleas, ants, mice, wasps nests and other pests unless you can prove that these are a result of us not meeting our repairing responsibilities or these...

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madisonwelch80
madisonwelch80 02 Aug 2016

16% is quite a raise. Let's hope this tendency won't continue for long.

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madisonwelch80
madisonwelch80 02 Aug 2016

?66,963 is a serious price drop However buying a property it a serious investment only small percentage of the UK population could afford.

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madisonwelch80
madisonwelch80 02 Aug 2016

Wow, it kind of surprised me. I mean counting on mom and dad's bank even after retirement is too much. That's the moment in life when one should have ensured themselves. I am shocked.

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AbbieP.
AbbieP. 22 Jul 2016

"While house prices in the most expensive eleven boroughs have declined values in the cheapest eleven boroughs continue to rise" - not a nice way to even out the price range. London is overrated as it

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AbbieP.
AbbieP. 21 Jul 2016

And try to profit from your decisions, I may add

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CommercialTrust
CommercialTrust 19 Jul 2016

Retirement investment has always been one of the biggest draws of buy to let. And the buy-to-let demographic is, on balance, older. (Over a third of our applicants are over 50 at the time of application.) It...

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Forrest Wheatey
Forrest Wheatey 11 Jul 2016

I find the time perfect for ever home-owner wannabe. Prices should slowly, but steadily drop, at least for the inner buyer. Making it harder for outsiders to buy properties (the whole Brexit thing means...

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