Annual growth of 1.2% in the banks’ net mortgage lending continues to outstrip annual growth of 0.8% across the whole lending market recently. Unsecured lending contracted by 1.8% over the 12 months to February, while personal deposits rose by 3.8%, though this was lower than the 4.2% annual growth seen at the same time a year earlier.
Mortgage lending
Gross mortgage lending of £7.9bn in February 2012 was 1.9% lower than in February a year earlier and below the recent six month average. Capital repayment by householders remains at a high level, resulting in a net mortgage lending increase of £0.5bn in February.
Number of approvals
In February house purchase approvals dropped back to more normal trend levels as demand from buy-to-let investors and first-time buyers, seeking to buy before the stamp duty exemption ends in March, fell back. The average house purchase mortgage (£146,600) was 5% higher than a year earlier.
Numbers of remortgaging approvals were at their lowest for 13 years. Approvals for other secured lending in February remained at a low level, being 6.7% lower than in February 2011.
Unsecured lending annual growth rates
Spending on credit cards of £7.0bn was in line with the recent six month average though, as regularly seen, monthly spending is more than offset by repayments. Demand from consumers for loans and overdrafts remained weak and repayment of this unsecured borrowing continues to outweigh new lending.
This behaviour has resulted in a constant contraction of borrowing levels over the past three years.
Business borrowing annual growth rates
Demand for borrowing from industry remained subdued in February as economic concerns and impaired confidence impacts on business growth and borrowing attitudes.
BBA statistics director, David Dooks said:
"Businesses and households continue to be cautious about their finances in the face of difficult economic times and this shows up in a reluctance to take on new credit, or where possible, seeking to pay back bank borrowing.
"Confidence will be helped in the coming months by official schemes to support the mortgage market and stimulate business demand for credit.”
Gerry Dupree, director of Dupree Mortgage Services, commented:
"The mortgage market has been more dynamic over the past three to four months due to the stamp duty holiday, which ends on Saturday. But this data shows there's a danger that dynamism will fade.
"However, while the end of the stamp duty holiday has clearly had an effect on the market, there is certainly more momentum in mortgages than there was six months ago. The hope now is that the arrival of the NewBuy scheme could see loan numbers pick up again.
"The recovery in the mortgage market is slow and it is still a little unsure, but it is a recovery nonetheless. Many would-be buyers have been putting their purchases on hold in the hope that things will get better, but they are starting to realise that life has to go on and are finally committing to a move.
"More people are aware that buying can often be cheaper than renting these days, and that the deposit needed to buy has also been coming down. The bottleneck of buyers is starting to give."
