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Eric Leenders, BBA Managing Director for Retail Banking said:
“In March, annual growth in consumer borrowing from the main high street banks* slowed, perhaps mirroring the dip seen in retail sales volumes as price rises appear to have started biting into consumers’ spending.
House purchase approvals were largely in line with last year’s average, broadly reflecting a steady housing market.
Business lending increased in March across a number of sectors including construction, manufacturing, retail and wholesale, and utilities.”
Annual borrowing growth rates
Gross mortgage borrowing in March totalled £13.2bn much in line with recent months. March last year was sharply inflated by purchases of buy-to-let and second homes ahead of the April rise in stamp duty, so year-on-year comparison is not appropriate.
Net mortgage borrowing in March was 2.2% higher than a year ago.
Consumer credit annual growth was 6.1% in March, compared with 6.5% in February. The decline reflected slower growth in personal loans and overdrafts (6.8%) and credit card borrowing (5.2%) over the same period.
Number of approvals
House purchase approval numbers of 41,061 were 2.8% lower than in February 2017 but in line with the monthly average of 41,600 over the previous six months.
Remortgaging approval numbers of 24,657 were 2% higher than in March 2016 but lower than in recent months and a little lower than the 2016 average of 26,000.
Other advances approved were 2.0% higher by number than in March last year.
Business borrowing annual growth rates
Borrowing by non-financial companies
Borrowing by non-financial companies increased by £3.6bn in March, partly due to short-term borrowing within the public admin sector which is likely to unwind next month The annual growth rate of 3.5% in March was higher than in recent months, with expansion in lending to the construction, manufacturing and wholesale and retail sectors.
Net capital market issuance in the first quarter of 2017 were £4.7bn (net) compared to £10.7bn (net) in the first quarter of 2016 and 2017 so far is not seeing capital issuance being used as an alternative to bank borrowing as much as in 2016.
Trends in net deposits
The annual growth in personal deposits in March was slightly higher at 3.4%.
ISA cash deposits rose by £0.8bn in March compared with £0.9bn in March 2016, as households ‘topped-up’ accounts with their 2016/17 allowances in advance of the year-end.
Non-financial companies’ deposits grew strongly in 2015 but fell back in 2016 to an average annual rate of 5% and are currently growing at an annual rate of only 4.2%.
*Figures referred to as ‘High Street Banks’ in this release relate to the UK activity of 21 institutions across the banking groups of Barclays, HSBC Bank, Lloyds Banking Group, Royal Bank of Scotland Group, Santander UK, TSB and Virgin Money.