Featured in Mortgage Finance Gazette:
Individuals secured an additional £6.2 billion in mortgage borrowing in February which is the strongest level since March 2016, the latest Bank of England (BoE) figures have revealed.
The latest data showed it was not just net
borrowing which was buoyant last month, but there were also a high number of
approvals.
The 87,700 approvals, although down on the
peak of 103,700 in November 2020, were still well above the monthly average in
the six months to February 2020, which was 67,300.
The BoE Money and Credit report for February
2021 also reported approvals for remortgages with a different lender increased
slightly from 32,600 to 34,300 between January and February.
When it came to gross borrowing the figure
reached £27.7 billion which was very close the March 2016 figure of £27.9
billion.
The BoE data also revealed the ‘effective’
rate - the actual interest rates paid - on newly drawn mortgages increased by
six basis points to 1.91% in February.
It said this was slightly higher than the
rate in January 2020 (1.85%) and compared with a series low of 1.72% in August
2020. The rate on the outstanding stock of mortgages remained at series low
(2.09%).
The BoE thought the strong borrowing figures
were caused by the flurry of activity as buyers rushed to meet the original
stamp duty holiday deadline of 31 March.
But John Phillips, national operations
director, Just Mortgages and Spicerhaart said thought there were other
influencing factors at play.
He said: “This is only part of the story. A year on from the start of the first lockdown, what is clear is that the pandemic has spurred people into action. Whether it is those looking to move for more outside space. Or the lack of commute meaning some are choosing to leave the city, in a year where our lives were turned upside down, priorities were shaken up. With the extension to the stamp duty holiday, the reintroduction of 95% LTV mortgages and the furlough scheme running till September, the property market should keep moving at a pace and we may see records broken for the first quarter of 2021.”
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