Higher rates subdue personal borrowing

29/05/2007

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April figures for high street lending show that mortgage demand is moderating in the face of rising interest rates.

April's gross mortgage lending of £17.3bn was 12% more than in April 2006. This largely reflects 10% annual growth in house prices and strong re-mortgaging activity.

There were 170,000 mortgages approved (for all purposes) in April; just 1% more than in April 2006, with an aggregate value of £19.1bn. The average loan approved for house purchase was £152,800, some 9% higher than a year earlier.

Underlying net mortgage lending (gross lending minus repayments and redemptions) rose by £5.0bn, slightly down on March’s increase, and lower than the recent average of £5.4bn. The annual growth in net mortgage lending continued to stay around 14%.

BBA figures also reveal that unsecured personal borrowing remains weak.

Credit card borrowing fell by £0.1bn (net) in the month, while borrowings on personal loans and overdrafts saw only a modest rise.

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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.dooksd@bba.or.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 £35bn tothe economy, and together make up the world's 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 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.

3. Statistical releases relating to the business of the MBBG are available on the internet on the BBA website.

4. 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. 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 31 May 2007.

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