Signs of mortgage demand weakening
March’s gross mortgage lending was £18.6bn, 5% more than £17.7bn in March 2006, according to the British Bankers’ Association (BBA).There were 198,000 mortgages approved (for all purposes) in March; some 8% lower than in March 2006, with an aggregate value of £22.3bn. The average loan approved for house purchase was £150,800, some 12% higher than a year earlier.
Underlying net mortgage lending (gross lending minus repayments and redemptions) rose by £5.1bn, similar to February’s increase, but less than the recent average of £5.5bn. The annual growth in net mortgage lending continued to stay around 14%.
BBA figures also reveal that other personal borrowing remains subdued
Credit card borrowing fell by £0.1bn (net) in the month, while borrowing on personal loans and overdrafts were largely unchanged.
David Dooks, BBA director of statistics, said: “Strong levels of gross mortgage lending reflect homebuyers and homeowners seeking out fixed rate mortgages as protection against rising interest rates. However, in the last two months net lending has risen less sharply and, compared to the same time last year, the number of mortgages approved in March was lower, indicating that weaker demand is starting to emerge.
“As people continue to reduce their commitments, weaker spending on credit cards and lower new loan borrowing than a year earlier led to another overall fall in personal borrowing.”
Mortgage Lending
When compared to March 2006, house purchase approvals were down 12% by number and 1% by value; remortgaging approvals were down 6% by number but up 8% by value; and approvals for equity withdrawal were down 6% by number but 1% higher by value.
Consumer Credit
New borrowing on credit cards totalled £7,017mn in March; 3% lower than March 2006. After seasonal adjustment, underlying net lending decreased by £117mn.
New lending on personal loans and overdrafts in March was well down on March 2006 and after seasonal adjustment, net lending fell by £47mn compared with a recent monthly average rise of £127mn.