Commenting on the latest Bank of England monthly Bankstats, BBA Chief Economist Richard Woolhouse said:
“Net mortgage lending is now back to pre-crisis levels. Together with the surge in mortgage approvals this provides further evidence that the housing market is hotting up.
“In particular, it seems that shrewd consumers are rushing to remortgage and grab competitive deals before interest rates start to rise from current record lows.
“The growing demand for unsecured lending also suggests that consumers are increasingly confident about the economic outlook.”Read more
New industry-wide figures published by the BBA show that bank lending to farms and other rural businesses increased by £1.3 billion last year – the largest rise since records began nearly 15 years ago.
The amount lent by major retail banks to agricultural businesses in the North and the South East expanded most quickly, both increasing by 15% in 2014.
However, there was growth in every region of the UK, with rises of 12% in Wales, Scotland and the North West.
The BBA’s Annual Statistical Abstract shows that loans and overdrafts to agriculture, hunting and forestry businesses grew to £12.4 billion in 2014 – up from £11.1 billion a year before and £10 billion in 2012.
This means the total volume of borrowing secured by this crucial part of the economy grew by £2.4 billion in two years – a rise of 24%.Read more
Richard Woolhouse, Chief Economist at the BBA, said:
“These figures show that thousands of us managed to tear ourselves away from the Ashes series to remortgage during July.
“This was a 29% surge on 12 months before and the highest figure we’ve seen for four years. Savvy homeowners are snapping up competitive deals before an expected increase in interest rates.
“There were concerns that new regulations had made applying for a mortgage more onerous. But remortgaging is still a straightforward process that can take even less time than Alastair Cook and his men took to beat Australia.”Read more
Richard Woolhouse, Chief Economist at the BBA, said:
“The housing market is beginning to hot up again, as we’ve seen a pick-up in the number of mortgage approvals for the last month. Interestingly, we’ve also seen an increase in the number of people remortgaging, which could be down to savvy borrowers taking advantage of competitive deals on fixed rate mortgages ahead of a possible rise in interest rates.
“Lending to some business sectors continues to show good results, although in the case of real estate banks are being cautious as they try to refinance bad loans.
“It’s good news that savings deposits are also up this month, as consumers put away a little something extra for a rainy day.”Read more
Consultation launched on new measures for cash savings account holders
The Financial Conduct Authority has launched a consultation on new measures for cash savings account holders.
Responding to the announcement, a spokesman for the BBA said:
“These have been frustrating years for savers. More than five years of the Bank of England’s base rate at a record low has fostered a low interest rate environment and that has not been easy for many customers to bear.
“During this period banks have made it easier for customers to find the right savings product for them. The electronic Cash ISA Transfer Service has helped to significantly reduce switching times, interest rate disclosure on savings accounts has improved and a number of providers have recently streamlined their savings ranges to help customers to navigate the market. We’re now working to deliver 7 day switching for the vast majority of Cash ISA transfers.
“We always encourage customers to review their savings regularly and to shop around for a better deal. We will look at these suggestions from the FCA with great interest.”Read more
The UK Government has introduced £40 billion in additional bank-only taxation over a period of a decade. From 2010-2020 banks will have faced an additional £4 billion a year in taxes on top of the tens of billions of other taxes that they already pay such as Corporation Tax, employment taxes, irrecoverable VAT and business rates.Read more
Demand for lending from small businesses significantly increases
Commenting on today’s Credit Conditions Survey from the Bank of England, BBA Chief Economist Richard Woolhouse said:
“It’s heartening to see that demand for lending from small businesses has increased significantly as this is a clear, positive sign that firms have the confidence to take on borrowing to invest and expand.
“At the same time we’re seeing demand for mortgages increase, as consumers take advantage of some of the extremely competitive mortgage deals that are available from banks at the moment. This – coupled with the increase in demand for personal loans – shows that people are starting to feel more financially secure and ready to commit to making bigger purchases.”Read more
Responding to the Chancellor’s Summer Budget, BBA Chief Executive Anthony Browne said:
“We welcome the Chancellor’s decision to amend the Bank Levy to reduce the damage it does to Britain’s biggest export industry.
“But introducing yet another new bank-specific tax will reinforce fears that Britain is becoming a less attractive place for banks to do business. This is the fifth new bank-specific tax measure in as many years following fast on the heels of the big rise in March and will increase banks’ tax burden by nearly £2 billion. We believe these moves will also undermine competition in the industry by making it harder for smaller players to break through and challenge larger banks.
“We still believe that the Government should conduct a strategic review of the way banks are taxed to ensure that the UK remains a competitive place for banks to do business.”Read more
A gold standard for accountability is good for customers and investors
Responding to the publication of the final rules confirming the approach to improving individual accountability Authority in the banking sector by the Prudential Regulation Authority and the Financial Conduct Authority, BBA Executive Director Simon Hills said:
“This new framework will help to restore trust and confidence in the banking industry damaged by the events of the last decade. A banking industry that sets the gold standard for accountability is good for customers and investors as well as those serving in it.
“The FCA’s decision to extend the time banks have to report suspected or actual breaches of the conduct rules to one year for staff who are not senior managers is a good move. It will reduce the reporting burden on firms and thereby on the regulator.”Read more
Responding to the Prudential Regulation Authority‘s (PRA) announcement that there will be changes to depositor and policyholder protection provided by the Financial Services Compensation Scheme (FSCS), a BBA spokesman said:
“It is disappointing that this protection has been reduced from £85,000. It had become well known and recognised by customers and banks alike. Our firms will work with the PRA and FSCS to implement the new £75,000 limit and assess the implementation issues that arise given that the transition period ends on 31st December 2015.
“A huge amount has been done to make the UK’s banking system safer for the future. As the Bank of England has stated, banks in the UK are now strong enough to weather even the severest of financial storms, and now hold five times more capital than they did before 2008.”Read more