BBA spots cracks in lending figures

At £21.0bn, August’s gross lending figure was only 1 per cent higher than in August 2006.

Other findings included:

  • Underlying net mortgage lending (gross lending minus repayments and redemptions) rose by £6.1bn. This was higher than July’s increase (+£5.8bn) and the recent average (+ £5.4bn), leaving annual growth still at around 14 per cent.
  • In August there were 168,291 mortgages approved (for all purposes) (8.8 per cent lower than in August 2006) with an aggregate value of £19.1bn (only 0.2 per cent higher than last year). The average loan approved for house purchase was £153,800, some 9 per cent higher than a year earlier.
  • Credit card borrowing fell by £0.1bn (net) in the month, while borrowing on personal loans and overdrafts fell by £0.3bn.
David Dooks, BBA director of statistics, said: “With house price inflation still in double digits, we might have expected stronger gross lending in August. However we are seeing a similar level to last year, which suggests that volumes are lower.

“Other than the current spate of remortgaging, loan approval numbers also endorse our view that customer demand was starting to moderate even before the September difficulties in the financial markets.

“The long-term net repayment of card debt continued, while borrowing through loans and overdrafts also fell in August, giving a subdued picture of consumer credit again.”

Mortgage lending

When compared to August 2006, house purchase approvals were down 14 per cent by number and 7 per cent by value; remortgaging approvals were up 4 per cent by number and up 11 per cent by value; while approvals for equity withdrawal were down 16 per cent by number and down 9 per cent by value.

Consumer credit

Spending on credit cards totalled £7,390mn in August 2 per cent more than in August 2006. After allowing for repayments and seasonal adjustment, underlying net lending decreased by £102mn.

New lending on personal loans and overdrafts in August was 11 per cent lower than in August 2006 and after seasonal adjustment, loan and overdraft lending fell by £270mn net.