Gross mortgage borrowing up 38% on last year

Gross mortgage borrowing is at its highest level since mid-2008, with January’s figures hitting £13.6 billion, up 38% year-on-year, new figures reveal.

The latest figures from the British Banking Association (BBA) point to an up-beat mortgage market: the number of mortgage approvals rising 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."

The average value of loans approved for house purchase rose to £178,900, while the average remortgage grew to £181,800.

Some analysts say this surge in activity will affect the housing market.

“This could well exert upward pressure on house prices in the near term,”

said Howard Archer, chief UK economist at IHS Global Insight.

“Post-April, this move may modestly dilute housing market activity and upward pressure on prices.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, is meanwhile reported as predicting a continuing increase in mortgage approvals.

“Consumer confidence is high, real income gains remain strong and mortgage rates are set to fall again in response to the decline in wholesale funding costs,”

he said.

“New buyer enquiries at estate agents have been rising quickly and point to mortgage approvals increasing by a further 5% over the next three months. With the active supply of homes on the market close to record lows, house prices look set for strong gains.”

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