Weaker mortgage outlook

25/10/2007

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The value of September's gross mortgage lending at £18.5bn was only 3% higher than in September last year.

Underlying net mortgage lending (gross lending minus repayments and redemptions) rose by £5.8bn. This was between Augusts increase (+£6.1bn) and the recent average (+ £5.6bn) and leaves annual growth still at around 14%.

In September there were 160,879 mortgages approved (12.1% fewer than in September 2006) with an aggregate value of £18.1bn (5.8% lower than last year). The average loan approved for house purchase was £152,300, some 8% higher than a year earlier.

Credit card borrowing rose by £0.1bn (net) in the month, the same as borrowing on personal loans and overdrafts.

David Dooks, BBA director of statistics, said:

"Lower amounts of new mortgage lending and fewer loans approved for house purchase signal a weaker outlook for the mortgage market, particularly if loan supply reduces in the aftermath of the recent financial markets difficulties and borrowing costs remain at current levels."

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For further information, please contact:
Brian Capon, Head of media relations (020 7216 8810 brian.capon@bba.org.uk )
David Dooks, Director of Statistics (020 7216 8837 david.dooks@bba.org.uk )

Notes to Editors:

1. The BBA is the leading UK banking and financial services trade association and acts on behalf of its members on domestic and international issues. Our members, from 60 different countries, collectively provide the full range of banking and financial services. They operate some 130 million personal accounts, contribute £50bn to the economy, and together make up the worlds largest international banking centre.

2. The Major British Banking Groups (MBBG) account for some two-thirds of all mortgage lending outstanding and around 65% of gross lending. Additionally, they provide over half of all consumer credit outstanding and, within that, some 70% of all card credit. They include twelve of the fifteen largest mortgage lenders in the UK: Abbey, Alliance & Leicester, Barclays, Bradford & Bingley, HBOS (through Halifax and Bank of Scotland), HSBC Bank, LloydsTSB (through Cheltenham & Gloucester), Northern Rock, Royal Bank of Scotland and National Westminster.

3. Statistical releases relating to the business of the MBBG are available on the internet in the 'News Room' area of the BBA website.

4. Figures shown for net changes in amounts outstanding are consistent with Table A4.3 of the Bank of Englands Monetary & Financial Statistics, which shows lending to individuals by banks and building societies excluding the effects of securitisations and loan transfers. However from January 2005 the series are also adjusted to remove fluctuations arising from regular intra-group transactions between banks and their non-bank subsidiaries, thus providing a better indication of underlying trends in mortgage lending. Other figures are consistent with the comprehensive data for lending to individuals by all lenders due to be released by the Bank of England on 29 October 2007.

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