Lending back at pre-crisis levels

The UK’s gross mortgage borrowing figure at the end of December was £110bn - a 20 per cent rise on 2012 and the highest annual amount since 2008, according to the British Banker’s Association (BBA).

Gross borrowing rose more rapidly towards the end of the year, with December’s £11.2bn 38 per cent higher than it was in the previous December, and increasing from November 2013’s £10.5bn.

While the stronger gross figure was said to reflect in part the apparent success of the government’s Help to Buy initiative, the net figure presented a different picture, largely due to higher capital repayments (in part through lender switching), which saw net monthly contractions for much of 2013.

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The net statistics excluded new mortgages, as well as repayments, redemptions and write-offs, which detracted from the overall figures.

However, overall mortgage stock did start to rise in the last two months of the year and 2013 saw more approvals for house purchase than in any year since 2007.

But assistance schemes have been criticised for being more about supporting the headline statistics.

Plan Money director Peter Wright said, “Help to Buy will probably force up house prices, potentially causing a bubble down the line. You’re offering people easy access to equity loans they may not really understand and if they can’t afford them now, will they be any more likely to in five years or so?”