Gross mortgage borrowing in August was £12.2 billion, according to the British Bankers’ Association (BBA).
This was 14% higher than a year ago and the largest increase since 2008. Net borrowing of £2.0 billion was the highest monthly rise since August 2010.
The number of mortgage approvals in August was 23% higher than a year ago, with remortgaging up 38% – at its highest level for four years – and house purchases up 16%.
Bank lending to companies increased in August but continues to be subdued overall, the BBA said. Capital market finance has grown by £11.5 billion in 2015 so far, with larger companies using it as an alternative to loans and overdrafts.
Richard Woolhouse, BBA chief economist, said: “People are putting their money into bricks and mortar while interest rates are low and the timing of a likely rate rise remains uncertain.
“Mortgage borrowing continues to pick up. The August increase is the largest in five years, although borrowing is still some way below pre-crisis levels.
“Remortgaging numbers also continue to be strong, as shrewd homeowners snap up competitive deals.”
Rishi Passi, CEO of Oblix Capital, said: “Far from the traditional summer slowdown, lending by high street banks actually grew in August, with high mortgage approval rates once again proving that the market is in rude health. But amid all this loan activity we’re at risk of ignoring the difficulties many property developers are still facing when looking for finance, a problem which threatens to limit the supply of fresh stock into the market.
“Unless SME developers can find suitable finance options for smaller scale short term projects, we may be storing up further price pressures down the line, which would put credit even further out of reach for borrowers. Alternative lenders are doing a huge amount to plug this gap, but overall lending levels are still a far cry from pre-recessionary levels.”
