Mortgage borrowing has shot up by 33% in the year to February as investors look to buy a property before the buy-to-let stamp duty changes come into effect in April, new industry figures show.
According to the British Bankers’ Association, gross mortgage borrowing was £13.2 billion in February, the second highest increase since mid-2008.
The number of mortgage approvals in February was 26% higher than a year ago, with remortgaging up 31% and house purchase up 20%.
British banks approved 45,892 mortgages for house purchases February, down from 46,916 the previous month.
Unsecured borrowing by households is growing at around 6% per annum reflecting low interest rates and relatively strong household finances.
Richard Woolhouse, chief Economist at the BBA, said: “Mortgage borrowing remained buoyant in February. It appears that borrowers are continuing to try to get ahead of the increases in stamp duty for buy-to-let and second home buyers scheduled to come into effect next month.
“Consumer confidence is also robust. Households are increasingly taking advantage of low interest rates by taking on more unsecured borrowing.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The BBA figures reflect the CML data for the same period with the mortgage market relatively buoyant.
“We expect this situation to continue in coming months with the mortgage market continuing to tick over. There are potential hiccups on the horizon which may foster some uncertainty, such as the EU referendum, but for many people life will go on and it will be business as usual. The challenger banks are keen to lend, while more established lenders also wish to bring in more business, which will be reflected in cheap rates and some tweaking of criteria. On the buy-to-let side, lenders will need to adapt to lending to limited companies as it looks as though an increasing number of investors will go down this route.
“Affordability constraints will continue to be an issue for some borrowers. Independent advice will be crucial, particularly for those borrowers who are older, self-employed, or require interest only.”
