BBA statistics director, David Dooks said:
"Demand for unsecured borrowing is slow, reflecting householders’ caution in the current economic environment.”
“Property-related companies and hotels & restaurants were the last industrial sectors to cut back their borrowing throughout 2009 and 2010 and there may be signs of those sectors emerging first. The level of borrowing by hotels & restaurants is now higher than it was a year ago.”
annual growth rates
Annual growth of the banks’ net mortgage lending was 1.5% in excess of the growth of 0.6% in September for overall mortgage lending.
Unsecured credit contracted by 1.0% over the past year and personal deposits rose by 3.2%. In the first ten months of 2011 deposits and savings have increased by £14.0bn compared with £24.9bn in the same period of 2010.
mortgage lending
Gross mortgage lending of £8.0bn in October was only just weaker than September, but it was 4% higher than in October 2010.
The slight upturn in recent months in both house purchase and remortgaging approvals has led to slightly stronger gross mortgage lending, but capital repayment continues at a high level, so net mortgage lending increased by only £0.9bn in October.
number of approvals
House purchase approvals were higher than in September and 16% higher than in October 2010. The average value (£145,400) was similar to a year ago.
Reports suggest that some activity may relate to growth in the buy-to-let market as rental yields improve.
The number of remortgage approvals was higher than in September and 3% higher than in October 2010.
Approvals for other secured lending are stable, as homeowners use the equity in their homes as security for borrowing.
unsecured lending annual growth rates
Although retail sales rose slightly in October, partly due to shops holding pre-Christmas sales, demand from consumers for unsecured borrowing remained weak. Repayment of loan and overdraft borrowing continues to outweigh new lending.
Borrowing on cards has expanded slowly over the past two years (and largely relates to interest added to accounts, because monthly spending is regularly more than offset by repayments).
business borrowing annual growth rates
The general decline in lending to non-financial businesses continued to moderate in October 2011. Businesses are typically operating on cashflow, constraining their demand for credit.
Duncan Kreeger, chairman of West One Loans, said:
“The mortgage market is staggering on, but it is battered and bruised. The protracted eurozone crisis and glacially-slow economic growth has handcuffed the high street banks.
"They are focusing on shrinking their assets to raise core capital, so appetite for growing their loan books has fallen almost completely off their radar. High loan-to-value mortgages are available, but almost no one can qualify for them.
"As a result, more borrowers – particularly property investors – are turning to bridging lenders, who have stepped in to fill the space left by the wounded high street banks. Gross lending in bridging finance has risen 46% since the start of 2010.
"Annual growth in gross lending of 4% in the mainstream market is insipid by comparison.”
Suzanne Bradshaw, an independent mortgage broker at Mortgage Arena, comments:
"A lack of consistency is the general trend in the mortgage market at the moment. Following a promising September, lending in October has been flat and with November and December historically slower months, we will be heading into the New Year without any real sense of what 2012 might bring.
"Looking on the bright side, borrowers have certainly grown in confidence in recent months buoyed by a general feeling that the property market has stabilised. Lenders are also competing again and this has resulted in some very attractive products at great rates.
"However, there is still an underlying nervousness among borrowers that market conditions could turn quickly and unexpectedly and this is certainly holding back a full recovery.
"On the product side, there has been a noticeable rise in the number of higher LTV products in recent weeks, but many borrowers are finding that the lenders' criteria at these higher rates are too strict, as opposed to the lower LTV deals where they are a little more relaxed.
"We are seeing far more enquiries on the buy-to-let side, especially from new landlords - people who haven't been landlords before but who are attracted by the soaring rental market.
"However, the arrangement fees on buy-to-let products are still prohibitive and this is putting a lot of potential landlords off entering the market."
Alex King, a director at SPF Private Clients, commented:
"In some ways the debate is no longer about whether the glass is half full or half empty. The level of mortgage lending has been flatlining for so long, the glass has got a tidemark.
"The BBA data echoes that of the CML - a slight fall in gross mortgage lending in October, but to a level that is almost exactly in line with the average for the previous six months.
"However on the interest rate front, the industry can take some small solace from the Bank of England's Monetary Policy Committee.
"Revealed in its minutes is a decidedly bleak assessment of the econom
