Mortgage lending still high but stabilising

Gross mortgage lending in March saw a seasonal fall to £28.8 billion in April, according to the Council of Mortgage Lenders (CML).

This was 9% down on the March figure of £31.7 billion, but still 18% up on the April 2006 figure of £24.4 billion, and the highest April figure on record.

The CML estimates that, if the figures were seasonally adjusted, they would show that lending has remained in a relatively narrow range in the first four months of the year, indicating a relatively stable picture.

CML Director General Michael Coogan commented: "Lending is still strong, but it does seem to be stabilising in 2007 following its major growth in 2006. With higher interest rates now beginning to have an impact, the modest slowing in activity that we have been expecting over the rest of the year looks set to materialise. Even so, we continue to expect lending in 2007 to be around 4-5% higher than in 2006."

Figures from the British Bankers’ Association (BBA)

Total sterling lending to the UK private sector rose by an underlying £9.1bn net (+0.7%) to £1,307bn. This compares with an underlying rise of £9.1bn in March and an average of +£11.4bn over the previous six months.

Net mortgage lending rose by an underlying £5.0bn. This was slightly lower than both the previous month and the recent monthly average of £5.4bn. Unsecured personal borrowing was unchanged overall in April, compared with a fall of £0.1bn in March. Underlying credit card borrowing fell by £0.1bn, while loans and overdrafts rose by £0.1bn.

There was a strong rise in lending to real estate companies (+£1.3bn) and also increases in lending to wholesale & retail trade (+£0.4bn), hotels & restaurants (+£0.3bn) and transport, storage & communication (+£0.3bn), partially offset by a decline of £0.5bn in lending to food, beverages & tobacco companies.

Deposits from the private sector rose by £13.3bn (+1.4%) to £982bn. Personal deposits increased by £1.9bn, less than the recent average monthly growth of £2.8bn, despite inflows to ISAs before the financial year end.

David Dooks, BBA director of statistics, said: “Lower mortgage demand, weaker deposit growth and little change in personal loans or credit card borrowing all point to people paying more attention to their finances. High house prices and increasing monthly repayment costs are causing a slow down in the mortgage market and people are using money from their accounts instead of borrowing to meet their spending needs.”