Demand for mortgages bounces back
Mortgage demand bounced back in May with the highest number of approved home loans of the year so far.
Figures from the British Bankers’ Association show that 77,443 homebuyers took out a mortgage during the month, up from 64,815 in April. It represented the largest monthly total since November 2006, but was down slightly on the same period last year.
Remortgaging also spiked during May, up from 60,476 in April to 77,584. In total there were 204,800 mortgages approved for all purposes last month with strong remortgage data leading to an overall annual increase of 2%.
The average size of mortgages being taken out jumped by more than £4,000 in May and now represents a 13% year-on-year increase.
Robust approval figures and a hike in the size of loans being agreed meant that gross mortgage lending in May was 8% higher than for the same month in 2006.
The BBA said the data followed the usual seasonal pattern of stronger lending going into the summer months.
David Dooks, director of statistics at the BBA, said: “Contrary to the recent stable trend, the banks’ gross and net mortgage lending strengthened in May, reflecting an improved competitive position rather than a rise in mortgage demand across the market.
“And because of strong approvals in May, the banks’ higher market share is likely to continue over the next couple of months.
But it was not all good news for the banks, as consumer attitudes to unsecured debt continues to wane. Credit card borrowing fell by £0.4 billion in May, while borrowing on personal loans and overdrafts dropped by around £100 million.
Mr Dooks added: “Although retail sales have grown recently, credit card borrowing continues to slow down as consumers prefer to pay up front rather than borrowing to spend.”