The British Bankers' Association (BBA) reports that January's mortgage lending strengthened a little and approvals for remortgaging were exceptionally strong. Unsecured lending remained subdued, while personal deposits showed stronger growth than lately.
BBA statistics director, David Dooks, said: "Higher gross mortgage lending in January largely reflected very strong remortgaging activity, as borrowers sought out the best deals available. Although house prices and new loans for house purchase, appear to be subdued as the housing market slows, the strength of remortgaging would suggest competition for mortgage business and switching remains high. Despite strong volumes of retail sales, card transaction volumes were little changed and spending was more than offset by repayments. Overall consumer credit remained subdued."
Gross lending was stronger than in recent months partly relating to very strong remortgaging approvals, which feed through to gross lending much sooner than approvals for house purchase.
Although net mortgage lending was stronger in January, the overall picture of monthly lending growth is in the middle of its range over the last few years. The annual growth rate has stabilised around 13% in recent months.
The pattern of house purchase approvals numbers has changed markedly in January 2008 with the share of remortgaging rising to a record 49% of all approvals. By contrast house purchase approvals have been fairly constant and low for the last four months and loans for equity withdrawal have continued to decline.
Annual growth in credit card borrowing rose further to +6.2%, and repayments continued to
outstrip new spending as they did in 2007. Annual growth in loans and overdrafts rose very slightly to +4.6%. Overdrafts declined slightly in January but the level outstanding has remained consistent at about £10bn for the last two years.
