Healthiest home-lending figures since the financial crisis

The latest mortgage lending figures are the healthiest since the height of the financial crisis, with a big year-on-year increase in terms of both the funds advanced to consumers and the number of home-loan approvals.

According to the British Bankers Association, gross borrowing in October was £12.9bn – more than 25% higher than a year ago and the highest figure since August 2008.

Meanwhile, the number of approvals during October was up 27% on a year earlier.

“These statistics show that housing market activity remained strong in October, with gross mortgage borrowing at its highest level for seven years,” says BBA chief economist Richard Woolhouse.

“Consumers remain confident and their incomes are growing. Mortgage rates are at multi-year lows and people are snapping up the very competitive deals being offered by banks.”

Charlotte Nelson, of Moneyfacts.co.uk, says competition is a key driver in the growth of the market.

“For instance, the average two-year fixed mortgage rate has dropped to 2.67%, the lowest on our records,” she says.

“Competition among longer-term mortgage products has also intensified thanks to near-constant base rate speculation. As a result, the average five-year fixed rate has dropped significantly, falling from 3.96% a year ago to 3.29% today, and borrowers are clearly taking advantage of these low rates to secure lower monthly repayments over the long term.”

Although there has been no consistent message from the Bank of England over when the base rate will rise, experts are recommending that potential borrowers or people remortgaging move quickly to secure the most competitive deals before they get more expensive.