British Bankers' Association (BBA) comments on last week's release of Major British Banking Groups' (MBBG) net lending figures for August. Further information now available on lending to individuals shows that:
* August's gross mortgage lending was a record £20.9bn, some 9% higher than July, and 24% higher than the £16.8bn in August last year.
* Underlying net mortgage lending (gross lending minus repayments and redemptions) rose by £6.2bn, compared with £5.8bn in July, an average of £5.4bn over recent months and £4.6bn in August 2005.
* There were 184,557 mortgage approvals (for all purposes) in August, with an aggregate value of £19.1bn. This number of approvals was 5% lower than in August 2005, though their value was 4% higher. The average loan approved for house purchase was £141,500, some 8% higher than a year earlier.
* Net lending on loans and overdrafts rose by £0.2bn in August, compared with an increase of £0.4bn in July and an average rise over the previous six months of +£0.3bn. In contrast, underlying net lending on credit cards fell by £0.4bn, compared with a fall of £0.1bn in July and compares with an average monthly contraction of £0.1bn over recent months.
David Dooks, BBA director of statistics, said: "Record gross and net mortgage lending is a reflection of house prices and mix of loans, rather than increased volumes. Compared to the numbers of secured loans approved at the same time in previous years, August shows robust and stable demand orientated towards house purchase rather than for other purposes, though below the volumes seen in 2003. The on-going weak appetite for consumer credit, driven by a further reduction in credit card lending, continued in August."
Mortgage Lending
The August increase of £6,165mn in seasonally adjusted net lending leaves the annualised rate of growth unchanged at 13%.
Compared to the same month a year earlier, August's loan approvals for house purchase were 3% higher by number and 11% higher by value. Remortgaging approvals were 12% lower by number and 4% lower by value and approvals for equity withdrawal were 6% lower by number but 3% higher by value.
Consumer Credit
New borrowing on credit cards totalled £7,228mn in August; 11% lower than August 2005. With repayments exceeding spending and after seasonal adjustment, net lending contracted by £399mn. New lending on personal loans and overdrafts in August was higher than in July and after seasonal adjustment, net lending of £186mn compared with a recent monthly average of +£332mn. The annualised rate of total consumer credit growth has more than halved from this time last year and stands at a little over 3% pa.
