United Kingdom net mortgage lending hit five-year high in August – BBA

British banks approved the highest number of mortgages in 18 months in August and net mortgage lending hit a five-year high as Britons made the most of record-low interest rates before an expected rise next year, data showed on Thursday.

Richard Woolhouse, chief economist at the BBA, said: “People are putting their money into bricks and mortar while interest rates are low”.

Expectations of a rise in interest rates has prompted a pick-up in mortgage activity, and unsecured borrowing has also increased.

Personal loan and credit card borrowing have also increased, the BBA said.

Not only that, but mortgage approval volumes are also witnessing considerable improvement, with the overall number of approvals in August being 23% higher than a year ago.

“Remortgaging numbers also continue to be strong, as shrewd homeowners snap up competitive deals”.

When the Bank will, in fact, begin to raise interest rates is far from certain.

Mark Harris, chief executive of mortgage broker SPF Private Clients, cautioned that borrowing is still some way below pre-crisis levels, suggesting a more moderate and sustainable housing market. And more than 25,500 were for remortgages – a 38% rise on past year.

Economists believe the strong demand combined with a lack of houses coming onto the market will drive up prices sharply again this year, a move which will continue even when interest rates do rise – something which markets expect could happen in the next 12 months.

A rise in unsecured borrowing, particularly by young adults, has been raised as a concern by charity Citizens Advice.