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Mortgage market continues to underperform

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The UK mortgage market has continued to underperform compared to last year, new lending figures have suggested.

The British Bankers’ Association’s monthly lending figures said gross mortgage borrowing in April was £10.5bn.

While this figure is marginally up on the previous month it is 13% lower than the same point last year.

As demand for mortgages has waned, the stock of mortgages has increased. The BBA said overall mortgage stock is 1% higher than a year ago.

House purchase approvals grew 3% year-on-year and the remortgage market has started to improve on its recent poor performance. Remortgage approvals increased 6% compared to April 2014.

Overall approvals were higher than in March, and 3% greater than the same point a year ago.

Richard Woolhouse, chief economist at the BBA, said: “British businesses and consumers have started to put their foot on the gas. There appears to be broad confidence about the economy, which the banks are supporting through affordable credit, leading to rises in borrowing across the board.

“Business lending has risen in three of the first four months this year indicating that we might have reached a turning point. There was a significant pre-election jump in mortgage approvals which we would expect to continue in the coming months.

“There was a sharp rise in the amount savers deposited in their bank accounts and also in the amount people are borrowing through personal loans and credit cards. This suggests that consumer spending will continue to drive the British economy forwards.”

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