Annual growth rates
The annual growth of the banks’ net mortgage lending was 2.7% in January, remaining substantially ahead of the 0.7% for the whole mortgage market in December. Demand for overall unsecured credit contracted by 2.0% over the past year, but over the same twelve months, personal deposits rose by 5.0%.
Mortgage lending
Gross mortgage lending of £8.2bn in January was slightly higher than the recent six month average of £8bn and 2% higher than gross lending in January 2010. Net mortgage lending increased by £1.6bn in January.
Number of approvals
House purchase approvals were slightly higher than in December 2010 but 29% lower than in January 2010. The average value (£135,200) was 2.7% lower than a year earlier. Numbers of remortgage approvals in January were 5% higher than the previous month and 28% higher than in January 2010.
Approvals for equity withdrawal continue to be weak and were 7.8% lower than January 2010.
Unsecured lending annual growth rates
Demand for unsecured borrowing remains mixed. Borrowing on cards has expanded over the past two years (largely reflecting interest, because spending is routinely offset by repayments), but new personal loans continue to be weak, some 5.8% lower than a year earlier.
Company borrowing annual growth rates
Business demand remains subdued, so contractions in lending in several company sectors continue, but at slower rates.
BBA statistics director, David Dooks said:
"We are seeing little change in the borrowing environment for households or businesses at the start of 2011. The high street banks have seen more remortgaging activity of late as people look to fix costs. The banks’ mortgage lending growth continues to exceed the rest of the market.
“In both unsecured borrowing and company finance, the emphasis is on repayment rather than new borrowing.”
Paul Hunt, managing director of Phoebus Software said:
“These figures from the BBA show that the mortgage market is still nervous about the UK’s economic future. While net lending rose in January, this was by no means a lending tsunami.
"With the impact of public spending cuts on unemployment and borrowers’ finances still uncertain, it’s far too early to start taking small increases in lending as signs of an ongoing recovery in the market. Lenders are still primarily concerned about repayments rather than growth and until the economic future looks more certain, this will remain the case.”
Richard Sexton, sales director of e.surv chartered surveyors, said:
“Both lenders and buyers are operating with caution. Fears over the economy have made buyers cautious and exacerbated the underlying weakness in the housing market. Those who do have an appetite to borrow are held back by restrictive LTV’s as lenders consolidate balance sheets.
"Wealthy investors are filling the vacuum by gobbling up cheap bricks and mortar using cash, then renting out to first time buyers who cannot secure a mortgage.
“This is a two-tier market. Wealthier borrowers have heftier deposits to side-step restrictive lending criteria; so approvals are holding up well on expensive properties and are cushioning the overall figures. The spectre of interest rate rises will frighten the remortgage market back into activity after a Christmas lull, and this will be reflected in February’s figures and beyond.
"The recent addition of several higher LTV products by some lenders offers some hope of improving conditions, but appetite for this higher LTV business may prove short lived"
