UK mortgage lending up in May

May’s gross mortgage lending of £19.7bn was 8% more than in May 2006, according to the British Bankers’ Association (BBA). Though the highest level of new business since November, partly reflecting strong re-mortgaging activity, it follows the usual yearly pattern of stronger lending going into the summer months.

There were 204,800 mortgages approved (for all purposes) in May; just 2% more than in May 2006, with an aggregate value of £24.2bn. The average loan approved for house purchase was £157,100, some 13% higher than a year earlier.

Underlying net mortgage lending (gross lending minus repayments and redemptions) rose by £5.8bn, well up both on April’s increase (£5.1bn) and the recent average of £5.4bn. The annual growth in net mortgage lending continued to stay around 14%.

Unsecured personal borrowing fell in May.

Credit card borrowing fell by £0.4bn (net) in the month, while borrowings on personal loans and overdrafts also fell, by £0.1bn.

David Dooks, BBA director of statistics, said: “Contrary to the recent stable trend, the banks’ gross and net mortgage lending strengthened in May, reflecting an improved competitive position, rather than a general rise in mortgage demand across the market. And, because of strong approvals in May, the banks’ higher market share is likely to continue over the next couple of months.

“Although retail sales have grown recently, credit card borrowing continues to slow down as consumers prefer to pay up front rather than borrowing to spend.”