annual growth rates
Unsecured credit contracted by 1.1% over the past year and personal deposits rose by 3.8%. In the first seven months of 2011 deposits and savings have increased by only £8.6bn compared with £16.3bn in the same period of 2010.
mortgage lending
Gross mortgage lending of £7.6bn in July was similar to June’s total and 8% lower than in July 2010. With the continuing weakness in both house purchase and remortgaging approvals, gross mortgage lending is largely stable.
With repayments continuing at a fairly high level, net mortgage lending increased by just £0.9bn in July.
number of approvals
House purchase approvals were higher than in June and slightly higher than in July 2010. The average value (£151,500) was 2% higher than a year earlier.
The number of remortgage approvals in July was higher than in June and 14% higher than July 2010. Reports suggest that remortgaging may have been stimulated by some growth in the buy-to-let market.
Approvals for equity withdrawal continue to be stable, as homeowners use the historic appreciation in the value of their homes as security for borrowing.
unsecured lending annual growth rates
Retail sales continue to grow very slowly and consequent demand from consumers for unsecured borrowing remains weak. Repayment of loan and overdraft borrowing continues to outweigh new lending.
Borrowing on cards has expanded, but only slowly over the past two years (and largely relates to the interest added to accounts, because monthly spending is regularly more than offset by repayments).
company borrowing annual growth rates
In the non-financial company sector, debt repayment was matched by new borrowing in July, although overall demand remained weak.
BBA statistics director, David Dooks said:
“The high street banks have provided almost three-quarters of all new mortgage lending during the last two years when the mortgage market has been very subdued.
“Overall companies’ appetite for finance remains low, reflecting business decisions in difficult trading conditions – new finance made available to one company is simply being offset by debt repayment from another.
“Demand for borrowing from both households and companies continues to be weak reflecting the slow growth in the economy.”
Chris Gardner of mortgage website, Obligo.co.uk, said:
"Same old same old from the mortgage market. Gross lending is ambling along but remains down on last year. But you can't complain.
"Not so long ago people were predicting Armageddon in the mortgage market and so flat is fairly positive.
"That remortgages are up reflects the exceptionally competitive deals in the market more than the threat of interest rate rises.
"People are aware that the mortgage market could rapidly turn against them in the current climate and so are remortgaging now while rates are so favourable. Some of the two and five-year fixed rates on the market right now are too hard to resist.
"On the buy to let side of things, we are seeing more landlords look to remortgage existing properties in order to free up some cash and add to their portfolios. The strength of the rentals market is proving just too big an opportunity for landlords to ignore."
Brian Murphy, head of lending at independent mortgage broker Mortgage Advice Bureau, said:
"Although mortgage lending is up in July we shouldn't get carried away on the back of one set of figures.
"Despite some very competitive fixed and tracker rate deals on the market, the return of higher loan to value mortgages and lenders relaxing their borrowing criteria, mortgage lending is still subdued - and July figures reflect mortgage applications made before the summer holiday period, when historically mortgage lending drops off.
"A stronger indicator as to the health of the mortgage market will be mortgage applications made in September and October. In a healthy market we would expect to see an uplift in numbers post summer vacations, but whether this will happen is anybody's guess.
"The problem doesn't lie with the lending environment, which is highly attractive at the moment. The problem lies with consumers feeling the financial pinch.
"With household bills escalating as food and energy prices continue to rise, this higher general cost of living is putting a squeeze on the amount of spare cash families have at the end of every month to put away in a house deposit fund.
"As a result, rather than new borrowers taking advantage of the low interest rate environment, it's existing homeowners taking the opportunity to pay down their mortgages."
Paul Hunt, managing director of Phoebus Software said:
“Mortgage approvals were subdued during the second quarter of this year, which reflects lenders’ nervousness about the impact public sector cuts and a possible rate rise would impact household finances.
"But although there are still concerns about the amount of growth we’re likely to see in the economy, the fact that a rise in rates is now a distant prospect means borrowers know they can keep finance cheap. This has emboldened them to compete to offer cheaper and cheaper repayment rates – like the 3.39% 5 year fix offered by Chelsea BS.
"Of course, the market is still subdued. There are less than half as many approval
