Net mortgage lending hit a five-year high in August driven by a surge in the number of home loans.
A total of 46,473 home loans were approved by British Bankers’ Association members, the highest number in 18 months, up from 46,315 in July and 40,454 the previous year.
Remortgaging in August was 38% higher than a year ago and house purchases were up 16%.
The data suggests that people in the UK are making the most of record-low interest rates before a hike later in the year, which has been delayed because of low inflation and a strong currency.
Net mortgage lending climbed up to 1.955 billion pounds, up from 1.701 billion the previous month and the highest level since August 2010.
The number of mortgage approvals over the month was 23% higher than a year ago, with remortgaging up 38% – at its highest level for four years – while house purchases were up 16%.
BBA chief economist Richard Woolhouse told Reuters: “People are putting their money into bricks and mortar while interest rates are low and the timing of a likely rate rise remains uncertain,”
“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.”
Howard Archer, chief UK and European economist at IHS Global Insight said that the stronger BBA data is a clear sign that property prices in the UK will continue to increase over the coming months.
He said: “We expect house prices to rise 7% in 2015 and then by 6% in 2016. A significant upside risk to these forecasts is currently coming from the shortage of houses on the market.
“Housing market activity will likely be supported by largely helpful fundamentals, notably including stronger earnings growth, high employment, elevated consumer confidence and still very low mortgage interest rates. Meanwhile, a limited stock of properties for sale is clearly exerting upward pressure on house prices.”
“However, higher interest rates are unlikely to have a major dampening impact on housing activity for some time to come as the Bank of England is stressing that interest rates will only rise gradually and to a limited extent,” added Archer.