Annual growth rates
The annual growth in the banks’ net mortgage lending of 4.3% (slightly lower than last month’s 4.5%) still substantially exceeds annual growth of just 1% in March for the mortgage market overall.
Subdued spending has led to consumer credit contracting by 2.6% over the year. Although investment in ISAs has been lowerthan previous years, personal deposits have risen 6.0% over the past year. Lending to non-financial companies has contracted by 5.4% over the past year
Mortgage lending
Gross mortgage lending of £8.2bn in April was lower than both March and the average of the previous six months (£9.1bn). Repayments were stronger than usual as banks actively encouraged borrowers to use surplus cash to reduce their borrowing where possible.
As a consequence, net mortgage lending grew by only £1.8bn in April compared with £2.3bn in March, and was below the previous six month average.
Number of approvals
The average value of house purchase approvals (£146,700) was 11.7% higher than a year ago. Numbers of remortgaging and equity withdrawal approvals continue to be lower than a year earlier.
Unsecured lending annual growth rates
Numbers of card purchases in April were down on the six-month average and much in line with the retail sales picture. Growth in card borrowing remains stable and reflects the fact that spending plus interest exceeds repayments.
Demand for personal loans remained at a low level, with new loans in April some 18% lower than the same month a year earlier.
Company borrowing annual growth rates
Growth rates for lending to non-financial companies all edged slightly upwards in April despite net lending still contracting, as company demand for borrowing remained subdued.
The construction sector continues to show the largest annual contraction, with the sector’s borrowing almost 21% lower than a year ago.
BBA statistics director, David Dooks said:
“Household priorities are clearly reflected in these latest data, with people paying down debt rather than building up savings, even in the main ISA season. Uncertainties about the impact of government policies and the economy on households and businesses will continue to dent consumer confidence and influence decision-making.
“Overall lending to companies remains subdued, although the annual rate of contraction appears to have bottomed out.”
Simon Rubinsohn, RICS chief economist said:
"The number of mortgage loans approved for house purchases edged up in April but still remains well down on the levels seen at the back end of last year. The unfavourable comparison is largely a reflection of the rush that took place to take advantage of the stamp duty holiday which expired on December 31st 2009.
"The subsequent decision of the previous government to introduce a new incentive for first-time buyers is likely to become increasingly visible in the mortgage data over the coming months. Indeed, the last RICS Housing Market Survey showed new buyer enquiries picking up to their best level since the end of last year.
"Moreover, the improvement was most marked in those parts of the country where potential home buyers are likely to derive most benefit from the new measure. By way of contrast, London and the South East, where the entry level for many is above the 250,000 threshold, actually saw a drop in interest in April.
"On a separate note, the BBA release also demonstrates the continuing pressure on the construction sector with lending to the industry declining once again in April.
"The recently released RICS Construction Market Survey highlights the lack of access to development finance as a key reason for the caution amongst industry professionals about the outlook with workloads expected to increase little over the next twelve months."
