The British Bankers’ Association (BBA) has revealed that gross mortgage borrowing of £17.1 billion in March was 64% higher than a year ago and the highest borrowing since April 2008.
This follows the reported sharp increase in purchase of buy-to-let and second homes, ahead of the increase in stamp duty on 1 April 2016.
The number of mortgage approvals in March was 20% higher than a year ago, with remortgaging up 25% and house purchase up 14%.
Unsecured borrowing by households is growing at around 6% per annum reflecting low interest rates and relatively strong household finances.
Dr Rebecca Harding, chief economic adviser at the BBA, said: “A surge in buy-to-let and second home buying ahead of the new stamp duty surcharge in April led to a sharp rise in March’s gross mortgage borrowing as people brought transactions forward.
“For households more widely, consumer credit continues to grow above real earnings growth, as improving consumer confidence and low interest rates combine to stimulate borrowing demand for personal loans, cards and overdrafts.
“Business borrowing is moderating within distribution, manufacturing, food and accommodation sectors, as large corporates use capital markets for their funding and both large and small businesses continue to build up deposits.”
Matt Andrews, managing director of Bluestone Mortgages, added: “Demand for lending is once again on the rise. However, with these latest figures showing the market steadily returning to health, it is easy to overlook the numerous workers throughout the UK who are still struggling to get access to appropriate borrowing.
“A large portion of the UK workforce who have complex financial circumstances are still being underserviced by mainstream lenders. This includes self-employed customers and contractors with inconsistent cash flows, or limited trading history, as well as customers with adverse credit histories who tend to fall outside of conventional credit scoring models.
“These borrowers require a deeper underwriting experience to ensure the nature of their situation is fully understood, and their individual circumstances are taken into account.
“For the mortgage market to truly recover, more flexible lending options need to be available to hard working people across the UK who have experienced genuine hiccups and deserve lenders that listen and treat each case with a tailored, individual approach.”