The British Bankers' Association (BBA) reports that mortgage lending rose more slowly in October and approvals for new mortgages, particularly for house purchase, were significantly lower. Unsecured lending remained very subdued and personal deposits were again weak. Lending to companies was above recent trends.
Gross mortgage lending continued to hold up in October. However, with the value of approvals falling sharply, this recent steady trend may not be maintained in the months ahead. Although net mortgage lending was lower in October than in recent months, the overall picture of monthly lending growth has not varied significantly over the last 3 years (minimum + £4bn, maximum + £6bn).
House purchase approval numbers fell sharply in October to a record low, as pressures on household finances and other factors combined to suppress demand. Approvals for remortgaging were also lower, although they account for a historically high share of all approvals. Loans approved for equity withdrawal and other purposes have continued to decline.
BBA statistics director, David Dooks, said of the latest data: "October's data provides evidence of a rapidly slowing mortgage market and of consumers limiting their personal borrowing. Pressure on household finances, the cumulative impact of interest rate rises over the last year, the expanded application of home information packs and the consequential impact of the credit crunch may well all have a part to play in suppressing current demand and supply. Personal deposits also remain below trend, as people continue to consider where they should hold their money in the light of the recent difficulties in the financial markets."
