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Friday 25th September 2009
Sharp increase in mortgage lending
Mortgage lending by the major banks rose by 46% in August following a dip during the previous month, figures have shown. Net lending, which strips out redemptions and repayments, reached £2.8 billion last month, recovering from just £1.9 billion in July, according to the British Bankers' Association.
The figure was slightly above the recent six-month average of £2.7 billion and 17% higher than in August last year, as demand continued to be boosted by the recovery in the housing market.
The number of mortgages approved for people buying a house was marginally down compared with the previous month at 38,095, reflecting the seasonal slowdown in housing market activity during August.
Demand for mortgages for house purchase has recovered steadily during the past year, with the number of mortgages approved for house purchase last month 81% higher than in August last year, and more than double the low of 18,330 reached in November 2008. But the number of people remortgaging remained subdued at just 26,124, while those releasing equity from their property or taking out a buy-to-let loan hit a new record low of 17,918.
David Dooks, BBA statistics director, said: "The main high street banks' mortgage lending has stabilised in a market where other lenders are largely inactive. "Loans approved for house purchase have recovered to early-2008 levels, but low levels of customer demand and a limited number of properties coming on to the market will continue to moderate lending."
Consumers continued to respond to the recession by reducing their levels of unsecured debt and increasing their savings. Credit card spending was slightly down on the previous month at £5.6 billion, with repayments continuing to outstrip new usage at £5.8 billion.
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