UK bank mortgage approvals jump 20%

December 24, 2015 12:24 pm Published by

Mortgage lending by UK banks jumps 20% in November, BBA says

  • 24 December 2015
  • From the section Business

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The number of UK mortgage approvals rose by 20% to 44,960 in November year-on-year, according to the British Bankers’ Association (BBA).

Gross mortgage lending reached £12.8bn, up 28% on the year and just shy of October’s seven-year record of £12.9bn.

BBA chief economist Richard Woolhouse said the figures showed “the continued strength of the mortgage market”.

The BBA also said that consumers borrowed more on credit cards ahead of the Christmas spending spree.

Mortgage brokers have reported recent signs of people being keen to snap up the cheap home loan rates being offered by mortgage lenders amid speculation that interest rates could start to rise next year.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The mortgage market shows no sign of slowing down. It’s been a busy year for many brokers as borrowers take advantage of exceptionally low mortgage rates.”

‘Concerns’

Separately, the BBA said that net consumer credit borrowing increased by £713m in November, from £422 million in October. It was the biggest monthly upswing in eight months. There were 242 million purchases with a total value of £13.2bn, the BBA said.

Howard Archer, chief UK economist at IHS Global Insight, said the rise will add to worries about a consumer credit bubble.

He said: “This will fuel concern that consumers are borrowing more and saving less to finance their spending, which is likely a consequence of relatively high consumer confidence and extended low interest rates.

“This is something that the Bank of England needs to keep a close eye on, and it does appear that some MPC members are becoming more worried.”

Meanwhile, in the wider economy, companies preferred raising money through the capital markets, such as issuing new shares for investors to buy, as opposed to seeking loans or expanding overdrafts at banks.

The BBA said that businesses raised £23.2bn in the first 11 months of this year. Net borrowing from banks fell by £300m in November, fuelled by declining demand from the real estate sector, transport, electricity and manufacturing.

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This post was written by FSB News