Regulatory Update

Continued strong mortgage lending and weak consumer credit


27/09/2006

Following last week's release of 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% p.a.

    • 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 Major British Banking Groups (MBBG) account for some two-thirds of all mortgage lending outstanding and around 70% 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 and Woolwich, Bradford & Bingley, HBOS (through Halifax and Bank of Scotland), HSBC Bank, LloydsTSB (through Cheltenham & Gloucester), Northern Rock, Royal Bank of Scotland and National Westminster.

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

    3. Figures shown for net changes in amounts outstanding are consistent with Table A4.3 of the Bank of England's 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. This has resulted in a restatement of series published previously. 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 September 2006.

    Related Links

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