New borrowing rose by 6% overall in 2015 compared to the previous year
The number of mortgage approvals in December was also up 24% higher on the previous year, with remortgaging up 31% and house purchase up 19%.
Richard Sexton, director of chartered surveyor e.surv comments: “Mortgage lending grew significantly over the course of last year, but two main drivers of the gross total – remortgaging and buy-to-let – have challenges in 2016 as some speedbumps are fast approaching. The rental sector will soon be coming face-to-face with extra taxes and Mark Carney signalled yesterday that the Bank of England may further step-in to cool buy to let loans if necessary. Meanwhile for remortgaging, many households have already locked in to lower mortgage rates, and the consensus view appears to be struggling to conceive of rates falling much lower in the immediate future.
House purchase lending is also now much healthier than a year ago, but supply continues to constrain the number of people that can move home or buy for the first time. There is momentum in the home movers market, but that could start to cool if people can’t find the homes to move into or purchase. So sellers urgently need to be convinced to come to market to avoid losing this momentum."
Andy Knee, chief executive of LMS, comments: "Uncertain economic conditions and fluctuating stock prices are taking their toll on the value of the pound and economic growth in the UK. But this is likely to have little impact on the wider housing market over the coming months, continuing the steady growth witnessed in 2015*. Given housing is still in short supply, we will not suddenly see a fall in demand or a drop in house prices, which will maintain momentum in the year ahead.
The stage is set for existing homeowners to remortgage, taking advantage of higher house prices and continued low rates to reduce outgoings – particularly important after the Christmas period – or pay off other debts. Despite a slight decline in activity towards the end of the year, remortgaging approvals were up by almost a third year-on-year in December. We expect this to pick up in the New Year as families take stock of their finances to maintain a consistent stream of remortgaging throughout 2016.”
Richard Woolhouse, Chief Economist at the BBA, said: “Last year was a strong year for household borrowing. There was a 6% rise in mortgage borrowing compared to 2014 and consumer credit expanded at more than 5% annually within an overall unsecured market which is growing at nearly 10% annually."
Adrian Whittaker, Sales Director, New Street Mortgages, commented: “These figures from the BBA show mortgage lending is significantly up year-on-year as rising demand in the housing market moves lending into a ‘new-normal’. In this new, more competitive environment, it is crucial that the mortgage application process does not create a bottleneck for customers in the race to buy property."
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "Cheap mortgage rates have certainly helped fuel the growth in lending in the market seen throughout 2015. Challenger banks keen to lend have helped push rates down to record lows and with interest rates unlikely to rise anytime soon, these low rates are expected to continue. However, we have probably seen the back of the very cheapest deals.
Remortgaging numbers moderated in December and are unlikely to surge in coming months as comments from the Bank of England suggest that a rate rise is off the agenda at least for now. Often it is only once rates start rising that homeowners feel an urge to remortgage, and often after two or three rate rises that they actually get round to it."
Adrian Anderson, director of mortgage broker Anderson Harris, added: "Borrowers exude confidence, incomes are rising, and lenders are keen to lend but this is not a debt-fuelled boom. Mortgage approvals are improving but far from racing away while growth is more moderate and therefore more sustainable than in the past. For many borrowers, tougher affordability criteria is still a barrier to getting a mortgage or remortgaging."
Eddie Goldsmith, Chairman of The Conveyancing Association said: “The figures for December from the banks appear to show a strengthening of the mortgage market as 2015 ended with December’s mortgage borrowing figures up by 24% on the same month in 2014, and up by 6% overall in 2015 compared to the previous year. The fact that mortgage approvals were 24% up in December, compared to December 2014, is also a sign of the growth during that 12-month period. Anecdotal evidence, and the testimony of our members, suggests that January has continued where December left off; indeed with the anticipation of higher stamp duty charges from April, there has been a considerable rush to secure mortgage finance, particularly by landlords, in order to complete by the 31st March and save on the stamp duty costs.
One can therefore expect that mortgage borrowing and approvals will continue to show an upwards trend certainly through the first quarter of 2016. However, what comes after this point is pure conjecture at present, given the tail-off in demand that may occur once the 3% extra stamp duty charge kicks in. Indeed, landlords are already having to make judgement calls about whether they will be able to complete their purchases before the deadline and, over the next few weeks, we may well see more landlords pulling out of purchases because of an inability to do this. This will clearly have an impact on mortgage approval numbers, borrowing levels and will also have a considerable knock-on effect to all those who were ‘sitting’ within those property chains.”
