Lending may have seen some growth in the buy-to-let market coming through.
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 only £0.5bn in June.
annual growth rates
Annual growth of the banks’ net mortgage lending was 1.8% in June, remaining well ahead of the 0.7% for the whole mortgage market in May. Unsecured credit contracted by 1.2% over the past year and personal deposits rose by 3.5%. In the first half of 2011 deposits and savings have increased by only £6.1bn compared with £15.9bn in the same period of 2010.
number of approvals
House purchase approvals were slightly higher than in May but 6% lower than in June 2010. The average value (£149,700) was 0.6% lower than a year earlier.
The number of remortgage approvals in June was higher than the previous month though in line with the recent average, as expectations of interest rate rises in the near-term have receded.
Approvals for equity withdrawal continue to be subdued but stable, as homeowners are able to use the appreciation in value of their homes as security for borrowing.
unsecured lending annual growth rates
Demand for unsecured borrowing remains weak with repayments continuing to outweigh new lending.
Borrowing on cards has expanded only slowly over the past two years (and largely relates to the interest added to accounts, because spending is regularly more than offset by repayments).
company borrowing annual growth rates
Repayments outstripped new borrowing in June as demand remained weak. This meant new lending fell, most obviously in the building sector.
BBA statistics director, David Dooks said:
“Banks continue to lend for house purchase but the weak mortgage market is self-evident, although some growth is coming from the buy-to-let sector to meet demand for rental properties.
“Personal deposits are growing only slowly as some people may be using savings to pay higher household bills.
“Businesses, as has been seen elsewhere, are concerned about the economic outlook and, in weathering difficult trading conditions, they are putting off expansion or investment plans and limiting borrowing.”
