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Mutuals and remortgagors drive August lending surge

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Mortgage lending by mutual societies rose by 32% year-on-year in August, according to Building Societies Association data

Building societies and other mutuals lent £4bn in August, compared to £3bn in August 2012.

Gross mortgage lending in the first eight months of the year was £26.1bn, 30% more than the same time last year.

Mutuals now represent nearly a quarter of gross mortgage lending in 2013, compared to a fifth this time last year.

The figures come as the Bank of England announced the volume of mortgage approvals rose 4.7% month-on-month, to reach £15.6bn.

Remortgage approvals surged to 36,225 – 14.5% higher than the six month average. The number of loan approvals for house purchase increased by nearly 10% compared to the same six month average, reaching 62,226.

LSL mortgage services director David Copland said the market was gathering speed: “What is surprising is that remortgaging has also increased. I would have expected this to remain static or even drop following Mark Carney’s announcement that Bank base rate will not rise for some time.

“However, with fixed rates remaining so low, the increase in remortgage numbers may be down to brokers calling the bottom of the market and advising their clients to switch to fixed rates now.”

Specialist broker Enterprise Finance chief executive Danny Waters said the figures confirmed the mortgage market was well on the way to recovery: “Both house purchase and remortgage numbers are strengthening by the day, which shows that people have woken up to the exceptional rates currently available.

“For the time being at least, borrowing is proving to be responsible, not profligate. The hope is that this continues and that neither lenders nor borrowers get carried away.

“What cannot happen is that people take on debt in the blind hope that the value of their home will bail them out.”

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