BBA statistics director, David Dooks said:
"Consumer spending was flat in May after the boost Easter and the Royal Wedding provided in April. Money is still tight and people continue to pay off debt rather than save or borrow.
“Companies in general are holding back on investment or expansion based on bank finance until the economic climate improves.”
annual growth rates
The annual growth of the banks’ net mortgage lending was 2.0% in May, remaining substantially ahead of the 0.7% for the whole mortgage market in April.
Unsecured credit contracted by 1.2% over the past year. Over the same twelve months, personal deposits rose by 3.6% though in the first five months of 2011 personal deposits have increased by only £4.8bn compared with £13.9bn in the same period of 2010.
mortgage lending
Gross mortgage lending of £7.6bn in May was lower than the recent six month average and 13% lower than gross lending in May 2010.
Despite the weakness in both house purchase and remortgaging approvals gross mortgage lending is largely stable, but with repayments continuing at a fairly high level, net mortgage lending increased by only £1.2bn in May.
number of approvals
House purchase approvals were slightly higher than in April but 15% lower than in May 2010. The average value (£147,700) was 1.9% lower than a year earlier.
The numbers of remortgage approvals in May were slightly higher than the previous month but well down on earlier in the year, as expectations of interest rate rises in the near-term appear to have receded.
Approvals for equity withdrawal continue to be subdued and were 20% lower than May 2010.
unsecured lending annual growth rates
Demand for unsecured borrowing remains weak with repayments continuing to outweigh new lending.
Borrowing on cards has expanded slowly over the past two years (largely relating to the interest added to accounts, because spending is regularly more than offset by repayments) however numbers of transactions in May were slightly above the six-month average.
company borrowing annual growth rates
Net lending to businesses in May continued to be weak as demand remained subdued and repayments exceeded new borrowing.
Simon Rubinsohn, RICS chief economist, said:
"The data released this morning provides no evidence that the mortgage log jam is easing. Indeed, the number of new mortgages issued in May was pretty much in-line with the average for the first five months of the year.
"Significantly, it was also close to the average for the second half of last year. At the very least, this suggests that the greater number of mortgage products on the market do not appear to be having a material impact on activity.
"This may be partly a function of the additional costs associated with some of these products, the strict criteria regarding availability, as well as the cautious attitude from potential homebuyers in the current economic environment.
"It is hard to see market turnover picking up in the near term. Key indicators from the latest RICS Housing Market Survey remain downbeat, most notably with new buyer enquiries.
"There is a strong regional element to this, with demand holding up better in London, the South West and Scotland. However, the relatively buoyant picture in these areas masks a much flatter demand in other parts of the UK."
