Figures from the Bank of England show UK mortgage lending has hit a new high with over 71,000 loans approved in August.
The Bank of England has released data showing 71,030 mortgage loans were advanced in August compared to an average of 65,600 over the previous six months.
This was 20% higher than the figures in November 2014 as lending increased to £3.4 billion in the month compared to £2.8 billion in July.
Data from the British Bankers’ Association (BBA) confirmed residential mortgage lending jumped 14% over the year to £12.2 billion including first time buyers, home movers and remortgage buyers.
This is the highest level since August 2008 when there were £13.2 billion of mortgage loans and mortgage debt now stands at £802 billion.
UK house price divide widens
The north-south divide is widening in England and Wales according to the Land Registry with new figures released. Prices fell in East Midlands by -0.2%, Yorkshire and the Humber by -0.3%, the North West by -1.3% over the month to August.
In contrast the East of England is rising at the fastest rate of 8.4%, with the South East, South West of England and London with a 5% increase per year or more.
The rise in house prices means first time buyers and home movers would require a larger deposit or higher earnings to buy making it harder to afford the mortgage repayments.
The rise in house prices means first time buyers would require a larger deposit or higher earnings to purchase their first home making it harder to afford a mortgage.
The following table from the Land Registry shows the rate of house price inflation:
| Area | Change | Value |
|---|---|---|
| London | 6.6% | £493,026 |
| South East | 7.6% | £254,658 |
| East of England | 8.4% | £210,042 |
| South West | 5.4% | £194,088 |
| England and Wales | 4.2% | £184,682 |
| West Midlands | 3.2% | £140,417 |
| East Midlands | 3.5% | £136,243 |
| Yorks and Humber | 1.2% | £123,063 |
| Wales | 0.9% | £118,899 |
| North West | 0.2% | £113,732 |
| North East | 0.4% | £100,943 |
The Land Registry has said England and Wales average prices are higher by 4.2% with the average price of a home now at £184,682.
For remortgage buyers higher property values give them an opportunity to release capital which they can use to improve their home such as adding an extension, bathroom or new kitchen.
However, the north-south divide is growing with property prices in London at £493,026 and the South East of England at £254,658 compared to the North east where the price of a home is the lowest at £100,943 and rising at only 0.4% over the year.
Older people struggling with mortgages
According to Saga millions of people have been abandoned by mortgage lenders and on un-competitive rates due to unfair age restrictions.
About one in seven aged over 70 are still paying off their mortgage with an average loan outstanding of £40,000. Some 14% of those surveyed said they felt the provider prevented remortgage buyers from moving to better rates due to their age.
Saga have said if these people were able to access better deals and their monthly payments would reduce giving them more money to enjoy in their retirement.
Howard Archer, economist at IHS Global Insight, said house prices are expected to rise by 7% in 2015 and 6% in 2016 due to the higher demand and shortage of property in the market.
For older homeowners with no loans, rising prices allow equity release mortgage buyers to access cash to maintain their lifestyle, holidays or home improvements and competition has seen rates fall from 6.7% a year ago to 5.8% today.
What are your next steps?
Talk to our London City Mortgage brokers for advice if you remortgage your existing home and want the best mortgage deal or release capital, buying your first home, moving home or are a buy-to-let investor.
Learn more by using the equity release calculator, mortgage cost calculators, and property value tracker chart. Start with a free mortgage quote or call us and we can take your details.
For older homeowners releasing equity from your property, our LCM mortgage advisers can recommend the lifetime mortgage, accessing wealth to buy a more expensive home or even gift to a family member or friend.
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