The flow of net sterling mortgage lending by all UK-resident mortgage lenders was little changed in June at 0.7 billion, and the annual rate of growth in the stock of lending was stable at 0.9%. According to data from the major UK lenders, net mortgage lending flows were broadly unchanged in July.
Data provided by the major UK lenders also include a split of gross lending between house purchase and the refinancing of existing mortgages (remortgaging). Gross mortgage lending for house purchase was unchanged in July, remaining close to levels seen during 2010 Q2. Remortgaging activity continued to be weak.
The stability in gross lending by the major UK lenders for house purchase in recent months has also been reflected in the official data on approvals for house purchase. Data from the major UK lenders indicated that their mortgage approvals edged down in July.
In recent discussions, most major UK lenders reported that demand for secured lending, including for remortgaging, remained weak. Consistent with that, the Royal Institution of Chartered Surveyors new buyer enquiries balance remained negative in July, indicating a decline in demand for house purchase.
Contacts of the Banks network of Agents reported that demand for housing continued to be constrained by the availability of mortgage finance.
The availability of secured credit to households has not changed significantly since the start of the year, as reported by lenders in the Bank of Englands Credit Conditions Survey. In some contrast to this measure of secured credit availability, the total number of advertised mortgage products increased markedly in the first two quarters of the year, according to data from Moneyfacts Group.
Most major UK lenders noted that their view of recent changes in secured credit availability was closer to that indicated by the Credit Conditions Survey. In recent discussions, lenders offered a number of potential reasons for the increase in the number of advertised mortgage products, including increased marketing activity and some new or returning entrants to the market.
To some extent, the increase was said to reflect a greater differentiation of products. In particular, reports of some increase in competition by lenders at higher loan to value (LTV) ratios could have increased the number of advertised mortgage products, as lenders offered a wider range of products around the same LTV ratio. Looking forward, the major UK lenders expected secured lending to remain subdued in the coming months.
The flow of net lending to UK businesses remained negative in June. The stock of lending to all the main sectors of the economy contracted in 2010 Q2. Some major UK lenders reported that spreads on lending to larger corporates continued to fall, but by a diminishing amount. Spreads on lending to small and medium-sized enterprises were little changed.
Contacts of the Banks network of Agents noted that credit conditions for smaller businesses remained tighter than for larger corporates, with demand for bank finance generally remaining weak.
The flow of net consumer credit decreased in June, though the annual growth rate of the stock of lending remained broadly unchanged and close to zero. Effective interest rates on credit cards increased slightly in June, while rates on personal loans edged lower.
Most major UK lenders reported no significant changes in credit availability or demand in July.
