The annual rate of growth in the stock of lending to UK businesses remained negative in the three months to February. The stock of lending both to small and medium-sized enterprises and to large businesses contracted over this period. Mortgage approvals by all UK-resident mortgage lenders for house purchase continued to rise, on average, in the three months to February. The annual rate of growth in the stock of secured lending to individuals rose to 1.1%. The annual rate of growth in the stock of consumer credit continued to be strong.
The number of mortgage approvals by all UK-resident mortgage lenders for house purchase continued to rise, on average, in the three months to February. These approvals fell in February, having increased in December and January, though remained considerably higher than the same period last year. The number of approvals for remortgaging was broadly flat in the three months to February but was stronger than the same period a year ago. Total gross secured lending rose in the three months to February compared to the previous three months.
Repayments on secured lending also rose in the three months to February, though by less than the increase in gross lending. More generally, gross mortgage lending has increased since the start of 2013. The monthly net mortgage lending flow in 2013 was around £1 billion, and has picked up in recent months such that the average net monthly flow of secured lending in sterling by UK-resident mortgage lenders in the three months to February was £1.6 billion. The annual rate of growth in the stock of secured lending to individuals rose to 1.1%.
Stephen Johnson, MD of Commercial Mortgages at Shawbrook Bank, said:
“Lending to small businesses is critical to the country’s economic recovery and it’s disappointing to see that lending still hasn’t picked up significantly. In part this is due to an on-going lack of awareness among some SMEs about alternative sources of finance. The government’s support of the specialist banks is very encouraging but we should all continue to spread the word that there are options beyond the high street. Brokers are key to giving borrowers an overview of the market and can help to educate small businesses that there are banks like us with a real appetite to lend.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, says:
"The volume of mortgage lending continues to rise as more buyers take advantage of the cheap rates available to get on the housing ladder or move up it. However, while transactions are much higher than a year ago across most of the country, they are still below pre-recession levels so the recovery still has some way to go.
"Two-year fixes were largely unchanged in the first quarter but five-year fixes have started to edge up, partly as a result of higher Swap rates which have doubled in the past year. However, there are still five-year deals pegged at around 3 per cent for those with sizeable deposits, which is excellent value. Help to Buy is having a significant impact on the number of higher loan-to-value deals now available, with lenders expected to do more lending at higher LTVs in coming months.
"With the new mortgage rules now introduced, we expect to see a slowdown in mortgage processing, particularly where borrowers go direct to the lender. However, once the new rules have bedded in and any glitches are ironed out, the market should continue to perform strongly for the remainder of the year."
