Subdued spending continues to lead to reduced consumer demand for unsecured credit (particularly on personal loans) which contracted by 1.6% over the past year. Personal deposits have risen 4.6% over the past year.
Mortgage lending
Gross mortgage lending of £8.0bn in September was 10.8% lower than a year ago. Net mortgage lending increased by £1.6bn in September compared to £2.9bn in the same month in 2009 as repayments continued to hold up at fairly strong levels.
Number of approvals
House purchase approvals continued to weaken in September reflecting low demand. The average value of house purchase approvals (£142,900) fell again in September but was still some 4.1% higher than a year ago.
Numbers of approvals for remortgaging have been slightly stronger in the last three months while those for equity withdrawal have fallen back slightly.
Unsecured lending annual growth rates
Numbers of credit card purchases rose slightly in September to just above the six-month average but generally continued to be weak in line with little growth in retail sale volumes. Repayment levels are holding up and more than matching new spending levels, so the stable growth in card borrowing largely reflects interest accruing.
Demand for personal loans continued to be weak in September with new borrowing some 7% lower than last year.
Company borrowing annual growth rates
The Bank of England’s Credit Conditions Survey suggests that credit availability improved for medium and smaller businesses in Q3, though demand weakened. The decline in lending to non-financial companies reflects a sharp fall in lending to real estate.
The increase in lending to financial companies reversed the fall seen last month.
BBA statistics director, David Dooks said:
“Subdued mortgage activity and little demand for unsecured credit are a reflection of household uncertainties ahead of this week’s Spending Review. Demand for new mortgages remains low despite more properties on the market and falling house prices.
“Business borrowing continues to reflect weak demand combined with companies reducing gearing by repaying bank borrowing.”
