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Mortgage lending climbs to £24.2bn in August

Gross mortgage lending reached £24.2bn in August on the back of a surge in remortgage activity, according to a UK Finance estimate.

The figure represents a 6.6 per cent increase on the £22.7bn recorded in July and marks the fourth successive month of growth in gross lending.

High street banks lent a total of £15.1 during August, described by UK Finance as being “in the same ball park as monthly lending over the course of 2017”.

At 27,768, remortgaging approvals by high street banks were well up on the monthly average of 25,056 over the previous six months and 15 per cent higher than in August 2016.

House purchase approvals were also up slightly to 41,807 – stronger than the monthly average of 41,133 over the last six months and 11 per cent higher than during the same period last year.

Other advances approved were 10 per cent higher than in August 2016.

A surge in remortgaging had been anticipated, with £35bn-worth of mortgages due to mature in September and October, according to CACI’s Mortgage Market Database.

UK Finance said it expected more home-owners to refinance in the coming months as a rise in interest rates becomes more likely.

UK Finance’s senior economist Mohammad Jamei said: “Housing market activity is in Goldilocks territory, growing only modestly since the start of the year, though the mix of activity has shifted towards first-time buyers, away from buy-to-let and cash.

“There is also some rebalancing across regions, as activity picks up in the north of England, Wales and Scotland, away from London, the south east and east Anglia.

“Despite resilience in consumer spending, annual growth in consumer credit has been slowing over the last few months. Across the UK some households have opted to save a little less, whilst others have not increased their borrowing.

“Meanwhile there has been growth in business deposits as non-financial companies hold cashflow and reserves amidst broader uncertainty in their trading conditions.”

Jeremy Duncombe, director, Legal & General Mortgage Club, said the figures showed the mortgage market was in a “strong position” and “clearly very much open for business”.

He added: “Amid Brexit, Trump and other global uncertainty, interest rates continue to remain at record low levels. However, with lender competition on a high and thousands of products available, consumers, and particularly first-time buyers, could be overwhelmed by the choice.

“This is precisely where brokers have a key role to play, helping consumers to understand the options available, navigate the market and encouraging them to secure their rates before the base rate inevitably rises.”

John Goodall, chief executive and co-founder of buy-to-let specialist Landbay, said: “In the buy-to-let market specifically, October’s PRA [Prudential Regulation Authority] changes are fast approaching, so some of this uplift is likely down to landlords making changes to their portfolios before the stricter lending and reporting criteria kick in.

“The changes are a good thing for the ongoing sustainability of the private rental sector, but many landlords are unaware of what the changes mean for them, so we could see a dip in Q4 lending levels while the industry adjusts to the new rules.”

Source: FT Adviser