Gross mortgage borrowing rose to £8.9bn in June, according to the British Bankers’ Association (BBA), better than May’s figure and above the six-month average.
The mortgage market continues its upward trajectory with borrowers tempted to take the plunge by lower rates and easing criteria. Help to Buy has got off to a flying start in its first four months, according to house builders, and is expected to give first-time buyers as well as second steppers, a boost from January when the guarantee element of the scheme is rolled out.
We expect mortgage rates to continue to be extremely competitive in coming months as a result of Funding for Lending and lenders continuing to vie for business.
Borrowers who can afford to do so continue to overpay on their mortgages, taking advantage of record low interest rates, and pay down debt where they can. This makes sense – why leave savings languishing in accounts paying such poor rates of interest when you can reduce your borrowing? There is also a reluctance to take on extra borrowing because of the uncertain economic and jobs climate. Confidence may be improving but it still has some way to go.
While lending volumes continue to improve each month, we remain some way off a sustained recovery in the housing market as caution continues to prevail.