Though approval processes were temporarily disrupted by the implementation of the Mortgage Market Review in early 2014, recent figures suggest a stable overall picture of approval numbers.
The report also shows that this year’s saving in ISAs and NISAs is running below investment levels over the same period last year. With the change to ISA rules, July saw £4.9 billion invested and there was a further £1.5 billion in August. However, total inflows in the year-to-date of £9.3 billion are below the £11.0 billion in the equivalent period of last year.
Higher unsecured loan demand continues to reflect rising consumer confidence and improving household finances. Net borrowing through personal loans and overdrafts is showing rising annual growth after contracting for a long period.
David Dooks, Statistics Director at the BBA, said:
“When customers feel more optimistic about the economic outlook they are much more likely to take on new borrowing.
Today’s figures show that mortgage lending in August was up 15% on last year and that credit card spending remains robust. But I was particularly struck that after years of decline demand for unsecured personal loans is rising quite strongly again.
Those products are often used to finance bigger purchase such as cars or major home improvements – the sort of spending we often put off until we feel confident about our financial circumstances.”
Richard Sexton, director of e.surv chartered surveyors, comments:
“The changes introduced in the Mortgage Market Review took a few months to settle down. But looking ahead, the road looks steady. We are still a way off where we should be, but there are reasons to be optimistic.
First-time buyers are the backbone of the UK’s mortgage market and the foundation on which the mortgage market’s post-recession recovery has been built. But after an extended period of flat wages, low interest rates and high inflation, many of them are still struggling to save for a deposit. Help to Buy has provided a route around that barrier. It is enabling worthy, responsible borrowers – many of whom are being held back from the property market by the economic downturn – a chance to get onto the ladder regardless.
Help to Buy has stirred new vigour into much of the dormant property market, waking up many regions from housing market hibernation. We are now seeing areas of the country previously forgotten in the property market recovery experiencing a surge in demand, largely thanks to Help to Buy. Young, low income and first time buyers are now looking for first homes across the country, taking advantage of lower house prices in much of the UK.”
Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), comments:
“Along with new affordability measures, the traditional summer slowdown is clearly a factor behind the lower number of mortgage approvals for September in today’s BBA figures. Judging from the flurry of product launches in recent weeks, lenders’ appetite for business remains strong and the potential delay of a base rate rise until summer 2015 suggests borrowers will continue to have their pick of low interest rate deals.
As a result, we have already seen application numbers pick up during September* as potential buyers return from holiday and focus their minds on making a move. The recent debate over interest rates will also have alerted many existing owners to the fact that better deals may be available to them, if not immediately then in the near future, and remortgage applications are continuing to set the pace.
Given there were some concerns over the future direction of the market earlier this year, the fact that September’s average loan has returned to a level (£157,700) last seen in February (£157,400) – and consistent with the average for the second half of 2013 (£157,450) – is a welcome sign that measured lending decisions are being made with clear heads.”
Peter Rollings, CEO of Marsh & Parsons, comments:
“There was some hesitation earlier in the year from new buyers following the Mortgage Market Review when stricter affordability checks on borrowing and lending slowed the process. Now these new regulations have bedded in, this has coincided with a broader stabilisation in the property market as house price growth tails off and the pace of transactions eases. But as trading conditions return to native territory after exceptional circumstances earlier this year, consumer confidence is on the up and all the building blocks are in place for a strong final few months of activity in 2014.
With an interest rate rise currently being kept at bay and many attractive mortgage products available, now is an excellent time to get onto the ladder. The supply of property currently on the market would have been unimaginable a few months ago, and there are now only 12 buyers competing for every available home for sale – compared to 24 in January. This fact, combined with robust demand and a healthy dose of realism, means sellers can still achieve excellent prices for their properties, benefiting from a strong annual growth in values.”
