Banks lent more to mortgage borrowers in February than at any time in the past five and a half years, according to the British Bankers’ Association (BBA).
With new mortgage lending and approvals also up 50 per cent on a year ago to the highest level since August 2008, demand for borrowing continues to soar. While borrowers tended to overpay throughout 2013 and reduce their mortgages, since the beginning of this year the amount of net borrowing has risen, demonstrating increased demand.
Government initiatives such as Help to Buy continue to boost the market and even though Funding for Lending is no longer focused on individuals, the market goes from strength to strength. Fixed-rate mortgages are by far and away the most popular form of borrowing as borrowers realise interest rates won’t stay low forever, and rush to take advantage of some of the cheap fixed rates.
Remortgaging is popular as those on cheap standard variable rates are finally taking the plunge and locking into a low fixed-rate mortgage. We expect this trend to continue as borrowers worry about rising interest rates.
Rising property prices are a concern for buyers, particularly first-timers who have saved hard for a modest deposit and are worried about being priced out further. The lack of stock is the main issue and while the Budget emphasised the need to build more homes, they simply can’t be built quickly enough.
With the Mortgage Market Review being introduced in little over a month’s time, there are concerns that mortgage processing will slow down. However, many lenders are already MMR compliant so the transition should be relatively painless.