Mortgage lending hits new July record
Gross mortgage lending reached a new record for the month of July, totalling £34.4 billion, according to new data from the Council of Mortgage Lenders (CML).Although this is down by 1% on the £34,847 of lending achieved in June, it is 13% higher than the £30.6 billion lent in the same month last year.
Mortgage lending remains robust despite the five interest rate rises since last August - although we have yet to see the full impact of higher rates. Lending is currently being fuelled by a large number of people remortgaging to better deals in case rates go any higher.
As we move into the autumn the cumulative effects of these rate rises will become more pronounced, and we expect this to feed through to lower levels of mortgage lending as the year progresses. We still believe, however, that we are on target to reach a record £360 billion of mortgage lending this year.
Figures from the British Bankers Association (BBA)
Total sterling lending to the UK private sector rose by an underlying £13.6bn net (+1.0%) to £1,346bn. This was similar to an underlying rise of £13.1bn in June and an average of +£13.7bn over the previous six months.
Net mortgage lending rose by an underlying £5.7bn. This was higher than the £5.4bn recorded in both the previous month and the recent monthly average. Underlying credit card borrowing fell by £0.1bn, while loans and overdrafts rose by £0.2bn.
Lending to real estate companies rose by £1.6bn while lending increased to retailers by £0.8bn, wholesale trade & garages by £0.2bn and transport, storage and communication by £0.2bn. Lending to construction reversed part of the rise of recent months, falling by £ 0.6bn and lending to hotels & restaurants fell by £0.5bn.
Deposits from the private sector rose by £7.0bn (+0.7%) to £1,000bn. Personal deposits increased by £2.9bn, only slightly lower than the recent average monthly growth of £3.1bn.
David Dooks, BBA director of statistics, said: “Longer-term trends in mortgage lending are little changed but July’s strong rise was surprising, given the expected cumulative impact of higher interest rates. This resilience shows the popularity of home ownership and also reflects more remortgaging activity.
“Consumers’ borrowing on cards again fell and personal loan and overdraft demand remained subdued because household finances have tightened. However, personal deposits are still being maintained.”
Total net lending rose by an underlying £5,875mn in July, compared to a revised £5,487mn in June and £5,617mn in July 2006. Of the total rise, mortgages accounted for an underlying £5,733mn, compared to increases of £5,395mn in June and £5,497mn in July last year. Consumer credit rose by £141mn overall; personal loans & overdrafts rose by £214mn compared to June’s rise of £167mn, while credit card lending fell by £73mn compared to a fall of £78mn in June and an average monthly fall of £116mn over the previous six months.
Lending to financial firms
Lending to financial companies rose by £151mn in July.
Lending to non-financial firms
Lending to real estate companies rose by £1,593mn while lending increased to retailers by £791mn, wholesale trade & garages by £201mn and transport, storage and communication by £183mn. Lending to construction reversed part of the rise of recent months, falling by £588mn and lending to hotels & restaurants fell by £514mn.