UK mortgage lending remains strong but shows signs of easing

Gross lending reached a new May record of £30.6 billion according to data from the Council of Mortgage Lenders (CML).

The figure is up by 12% on April's lending total of £27.4 billion and is 5% higher than the same month in 2006 (£29 billion). However, the rate of year-on-year growth is not as high as we have seen in the first four months of the year - typically around 12-15%.

CML director general Michael Coogan said: "While today's lending figure is a new record for the month of May, it does indicate that the market is slowing down following the rapid and sustained growth we saw last year.

"Going forward we expect lending to ease as we progress through the year, but the market will remain in good shape. Although further interest rate rises will continue to dampen demand, we are still on course to meet our prediction of a record £360 billion of lending during 2007."

Figures from the British Bankers’ Association (BBA)

Major British Banking Groups' figures, for May 2007, show that:

Total sterling lending to the UK private sector rose by an underlying £18.7bn net (+1.4%) to £1,321bn. This compares with an underlying rise of £9.6bn in April and an average of +£11.2bn over the previous six months.

Net mortgage lending rose by an underlying £5.8bn. This was higher than both the previous month (£5.1bn) and the recent monthly average of £5.4bn. Unsecured personal borrowing fell by £0.5bn in May, having been unchanged in April. Underlying credit card borrowing fell by £0.4bn, while loans and overdrafts fell by £0.1bn.

There was a strong rise in lending to real estate companies (+£1.8bn) and also increases in lending to construction (+£0.6bn), hotels & restaurants (+£0.3bn) and manufacturing (+£0.2bn), partially offset by a decline in lending to wholesale & retail trade (-£0.4bn).
Deposits from the private sector rose by £10.0bn (+1.0%) to £988bn. Personal deposits increased by £4.0bn, stronger than the recent average monthly growth of £2.9bn.

David Dooks, BBA director of statistics, said: "The recent trend in mortgage lending had been downward, so the stronger demand in May was somewhat surprising, particularly as it was before the anticipated introduction of Home Information Packs, which encouraged people to put their properties onto the market in May and will tend to boost lending in June and July. HIPs may well distort mortgage data in the short-term, but this effect should smooth out with the phased introduction now planned."

"People still seem to be managing their finances soundly, with borrowing on plastic cards falling for 10 out of the last 12 months and personal deposits rising by more than the recent average."