Mortgage lending in the U.K. has surge as borrowers and investors try to beat the implementation of new stamp duty in April.
According to The Guardian, gross mortgage lending in England and Wales rose 38 percent in just one year at £13.6 billion. This is also the highest level recorded since mid-2008.
The increase marks a strong start of the year in the mortgage market as investors race to secure approvals on their borrowings before they face higher taxes come April. The stamp duty change will see second homes rates increase by three percentage points. The rate increase is part of the government's efforts to cool the heating market.
Both house purchases and remortgaging rose based on data from British Bankers' Association. Last month, 80,285 mortgages were approved by BBA members, of which 47,509 were for home purchases and 25,040 for remortgages.
"The BBA data clearly point to housing market activity being lifted by buy-to-let investors and second home buyers looking to make a purchase before April's rise in stamp duty for the sectors," Howard Archer, chief UK and European economist at IHS Global Insight, said via This Is Money. "This could well exert upward pressure on house prices in the near term. Post April, this move may modestly dilute housing market activity and upward pressure on prices."
House prices are expected to jump to as much as 6-7 percent within the year as buyers' interest grows and property shortages continue, Archer added.
The upward trend in mortgage approvals is likely to continue, according to Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
"New buyer enquiries at estate agents have been rising quickly and point to mortgage approvals increasing by a further 5 percent over the next three months. With the active supply of homes on the market close to record lows, house prices look set for strong gains," Tombs added.
