Mortgage lending up 24 per cent in a year -BBA

The number of mortgage approvals in December was 24 per cent higher than a year ago, with remortgaging up 31 per cent and house purchase up 19 per cent, the BBA said.

Richard Woolhouse, Chief Economist at the BBA, said: “Last year was a strong year for household borrowing. There was a 6 per cent rise in mortgage borrowing compared to 2014 and consumer credit expanded at more than 5 per cent annually within an overall unsecured market which is growing at nearly 10 per cent annually.

“Over the last few years businesses have been reducing their bank borrowing partly by deleveraging or by refinancing debt through capital markets; 2015 saw business lending other than construction and real estate move into positive annual growth.

Richard Sexton, director of chartered surveyor e.surv said: “Mortgage lending grew significantly over the course of last year, but two main drivers of the gross total – remortgaging and buy-to-let – have challenges in 2016 as some speedbumps are fast approaching. The rental sector will soon be coming face-to-face with extra taxes and Mark Carney signalled yesterday that the Bank of England may further step-in to cool buy to let loans if necessary. Meanwhile for remortgaging, many households have already locked in to lower mortgage rates, and the consensus view appears to be struggling to conceive of rates falling much lower in the immediate future.

“House purchase lending is also now much healthier than a year ago, but supply continues to constrain the number of people that can move home or buy for the first time. There is momentum in the home movers market, but that could start to cool if people can’t find the homes to move into or purchase. So sellers urgently need to be convinced to come to market to avoid losing this momentum.”

The association’s High Street Banking Statistics for December 2015 also revealed that there were 262 million credit card purchases in December, with a total value of £13.7 billion.

This was an aggregate value 3 per cent lower than December 2014 (£14.2 billion).

Mr Woolhouse added: “This data shows that the amount spent on credit cards in December declined compared to 2014. It seems that consumers were less reliant on credit cards to fund purchases last month despite Christmas shopping and seasonal sales.”