Strong mortgage lending to continue

November’s gross mortgage lending was a record at £21.4bn, some 13% higher than October’s figure and 19% higher than the £18.0bn in November last year, according to the British Bankers’ Association (BBA).

Underlying net mortgage lending (gross lending minus repayments and redemptions) rose by £6.7bn, compared with £5.7bn in October, £5.1bn in November 2005 and an average of £5.7bn over recent months.

There were 206,051 mortgage approvals (for all purposes) in November, with an aggregate value of £23.0bn. This number of approvals was 6.8% higher than in November 2005 and their value was 20.8% higher. The average loan approved for house purchase was £146,900, some 12% higher than a year earlier.

Net lending on loans and overdrafts fell by £0.1bn in November, compared with an increase of £0.7bn in October and an average rise over the previous six months of +£0.4bn. In contrast, underlying net lending on credit cards rose by £0.1bn, compared with a fall of £0.3bn in October and with an average monthly contraction of £0.2bn over recent months.

David Dooks, BBA director of statistics, said: “The contrast between the annual growth rate of net mortgage lending, at 14% and consumer credit, at 2%, is noteworthy.

In the mortgage market, the high number of loans approved in November, which is not usually a strong month, suggest that the trend in mortgage lending will continue to be robust over the next few months.

Monthly spending on credit cards and the value of new personal loans taken out have been generally lower in 2006 than in the previous couple of years, while repayment levels have been maintained, leading to this year’s picture of subdued borrowing.”

Mortgage Lending

The November increase of £6,664mn in seasonally adjusted net lending raises the annualised rate of growth to 14%.

Compared to the same month a year earlier, November’s loan approvals for house purchase were 9% higher by number and 23% higher by value. Remortgaging approvals were 7% higher by number and 20% higher by value; whilst approvals for equity withdrawal were 3% higher by number and 14% higher by value.

Consumer Credit

New borrowing on credit cards totalled £7,268mn in November; 3% lower than
November 2005. With repayments exceeding spending and after seasonal adjustment, net lending increased by £66mn.

New lending on personal loans and overdrafts in November was lower than in October and after seasonal adjustment, net lending fell by £87mn compared with a recent monthly average of +£395mn.

The annualised rate of total consumer credit growth is well down on this time last year and stands at a little over 2% p.a.