Within that, remortgaging was some 20% higher, reflecting borrowers’ appetite to lock in to current fixed rates and gain certainty over their future outgoings.
Gross mortgage borrowing in June was £11.5 bn, 6% higher than in the same month last year.
After seeing slower demand in the second half of 2014, the overall mortgage stock is now 1.1% higher than a year ago.
Richard Woolhouse, Chief Economist at the BBA, said: “The housing market is beginning to hot up again, as we’ve seen a pick-up in the number of mortgage approvals for the last month. Interestingly, we’ve also seen an increase in the number of people remortgaging, which could be down to savvy borrowers taking advantage of competitive deals on fixed rate mortgages ahead of a possible rise in interest rates."
Brian Murphy, Head of Lending at Mortgage Advice Bureau, commented: “A substantial leap in mortgage approvals this June suggest the housing market has once again stepped up a gear, building on the steady growth over the previous three months. Despite the squeeze on housing supply, record low interest rates are helping to ease affordability concerns for those borrowers who can stump up enough money for a deposit. As a result, lower earners are increasingly active in the purchase market and can borrow with the confidence that their finances are being thoroughly stress tested against the prospect of higher rates in future.
The anticipation that rates could rise sooner than expected is almost certain to encourage more activity during the second half of 2015. Savvy borrowers will be well aware that they realistically have a limited window to secure a deal at today’s record low rates and it is no coincidence that the remortgage market has recently sprung back to life, with a 20% year-on-year rise in approvals. Strong competition between lenders has also pushed product numbers to a post-recession high, with more options on the market for borrowers to choose from at competitive rates.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: "With the general election finally out of the way, strong lending figures demonstrate that confidence in the housing market continues to improve.
However, the real growth in lending has been on the remortgaging side, with borrowers keen to snap up a cheap fixed-rate mortgage. With Mark Carney’s recent comments about a potential rate rise at the turn of the year, we expect to see significant growth in the number of people remortgaging in coming months.
While more people are enquiring about remortgaging, there are many who will sit on their hands and wait until interest rates actually start to rise. Anecdotally, the first rate rise is the trigger point for many people remortgaging but it may even be the second or third increase, as that is when there is a significant impact on a household’s expenditure and people then remortgage to ‘save’ money. However, by then the best fixed rates will have long gone."
