Mortgage lending levels off in July

In July, mortgage lending rose by £4.3 billion; the same as in June, according to the British Bankers’ Association (BBA). The number of house purchase approvals continues to be very low while those for remortgaging have fallen.

Consumer credit rose by £0.1bn in July and was below the previous 6 month average of £0.3bn. Personal deposit growth was weak and consequently the annual growth rate declined by 0.8% to 4.8%.

BBA statistics director, David Dooks, said of the latest data: “The monthly numbers of approvals for house purchase, which have fallen by some two-thirds over the last year, levelled off in July. It would, however, be premature to think that the housing market will now start to recover, because overall approval activity continues to be very low. The pressures on household budgets are reflected in the relatively weak rise in individuals’ deposits and, with consumer borrowing growing only slowly it seems that consumers are acting prudently.”

Net mortgage lending in July was similar to both May and June, maintaining an annual growth rate of 12.0%.

Approval activity continued to decline during July, particularly for remortgaging and gross lending in the month was 3% lower than in June and 25% lower than a year earlier.

Approvals for house purchase may be stabilising, at a very low level in July, some 65% lower than a year ago.

Approvals for remortgaging in July were 21% lower than last year but were still around 50% of all approvals. Approvals for equity withdrawal & other purposes shaded upwards in July.

Annual growth in credit card borrowing decreased slightly to + 7.0%. New spending was 2% lower than a year ago and the lowest figure since June 2007.

Repayment levels were also at their lowest level for over a year. Borrowing on overdraft rose slightly but gross unsecured loans remained subdued.

Personal deposits rose by £0.8bn in July to continue the pattern of weaker deposits seen in the last few months. The annual growth rate fell to 4.8%.