The UK’s improving economy has seen a surge in mortgage lending and the amount loaned in August reached a 19 month high, according to the Bank of England.
The number of mortgages that were approved grew to 71,030 – higher than the forecast of 69,800 – to become the highest since January last year.
In total, lenders approved loans worth £15.6 billion in August which is the highest amount since 2008.
The growth in mortgage lending points to a strengthening housing market with some areas of the UK seeing new house price records being reached in September, according to property portal Rightmove.
Finance experts are pointing to weak inflation, strengthening wage growth and low mortgage borrowing costs for fuelling the trend.
Growth in mortgage lending and house price rises
Indeed, the growth in mortgage lending and house price rises is being helped, for instance, by the availability of two-year mortgages with a 25% deposit which had a rate of 2.5% year ago but this has now dropped to 1.95%.
The chief economist at IHS Global Insight, Howard Archer, said: “August’s performance may have been lifted by house buyers wanting to move quickly and looking for low mortgage interest rates before they rise.”
He added that strong buy to let activity was also helping to push up mortgage approvals.
IHS is predicting that house prices in the UK will grow by 7% this year and by 6% next year.
Access cheap mortgages with research
However, not everyone is able to access cheap mortgages with research from specialist lender Kensington revealing that one in three contractors is struggling to be accepted for a mortgage since leaving a secure staff job.
Kensington says that the potential mortgage market for contractors is huge with around 1.2 million people working in the sector and, the firm argues, mortgage lenders need to address this demand.
Kensington also says that contractors are highly creditworthy with 42% saying they earned more than they did in a staff job and 45% saying they had been working on a contract for two or more years.
Bridging loan firm reduces its minimum valuation
Meanwhile, one of the UK’s leading bridging loan providers is meeting growing demand by reducing its minimum valuation demand for light refurbishment to £75,000.
Previously, Aldemore had a minimum requirement of £100,000 which is in line with their buy to let and residential mortgages.
Aldemore has also reduced the minimum age requirement for a bridging loan from 25 to 21, except for first-time landlord applicants.
Exit bridging loan and switch to a commercial product
In addition, when their clients want to exit their bridging loan they can switch to a commercial or buy to let product for their long term funding needs.
Aldermore’s group managing director, Charles Haresnape, said: “The demographics of those seeking a bridging loan is changing and we are moving away from the idea of an ‘average customer’.
“We are committed to continually improving our services and products to provide bespoke and flexible financing options.”