Investors and second home owners keen to avoid stamp duty rises have caused a surge in mortgage borrowing, figures have revealed.

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High street banks have reported a “significant rise” in mortgage borrowing, with levels at their highest since mid-2008, the British Bankers’ Association (BBA) said.

Gross mortgage borrowing stood at £13.6bn in January – 38% higher than a year ago and the highest since mid-2008.

The BBA said there were 27% more approvals for house purchase in January than in the same month of 2015.

The surge is driven in part by buy-to-let and second home owners keen to complete before new stamp duty rules come in. - - Image by 1000 Words/

This was, in part, due to buy-to-let and second-home buyers keen to complete property purchases ahead of the increase in stamp duty in April.

New stamp duty rules set to come into effect from 1 April will add a 3% surcharge to the purchase of a buy-to-let property or the purchase of a second home costing more than £40,000.

Remortgaging approvals increased in January and were around 42% higher than January 2015 while other approvals were 43% higher than a year ago.

Approvals overall were 33% higher than at the same time a year earlier, according to the BBA’s data.

Richard Woolhouse, chief economist at the BBA, said: “The start of the year has seen a significant rise in mortgage borrowing.

“It seems that this has been driven, in part, by borrowers looking to get ahead of the increases in stamp duty for buy-to-let and second home buyers scheduled to come into effect in April.

“Net lending to non-financial companies saw the biggest monthly jump since July 2008 as businesses take advantage of record low interest rates.

“Demand from the transport, storage and communication and construction sectors was particularly strong.”

Credit card borrowing has continued to rise, both for high street banks and the wider market. - Image by gpointstudio/
According to the BBA, over the past year net borrowing through personal loans has been rising at an annual rate of more than 5%.

Increased demand for personal loans reflects better credit availability, low interest rates and stronger household finances, it said.

Annual growth in high street banks’ credit card borrowing was 6% in January, exceeding growth in the wider credit card market which grew at an annual rate of 4.3%.

In the wider credit card market, card use continues to rise, the BBA said.

There were 200m purchases in January, with a total value of £11.4bn – slightly higher than in January 2015.

The data from the BBA comes after the Council of Mortgage Lenders (CML) revealed that gross mortgage lending in December was at its highest level since 2008.

The CML, whose members are banks, building societies and other lenders who make up around 95% of all UK residential mortgage lending, said the estimated total for the year was £220.3bn.

This was an 8% increase on 2014’s £203.3bn and the highest annual gross lending figure since 2008.