UK mortgage approvals plummet

In August, net mortgage lending rose only by £2.1 billion; less than half the average rise over the previous six months, according to the British Bankers’ Association (BBA).

The number of approvals for house purchase was again very low and those for remortgaging also fell.

Consumer credit rose by £0.4bn in August, slightly above the previous 6 month average of £0.3bn. Personal deposit growth continued to be weak and the annual growth rate declined by 0.7% to 4.0%.

BBA statistics director, David Dooks, said of the latest data: “The low number of mortgage approvals in previous months predicted lower gross lending in August and, together with remortgaging, a much weaker net lending figure than of late resulted. Falling property prices, economic pressures on households, tighter lending criteria and anticipation of the Government's announcement on stamp duty all suppressed or delayed demand in August and will continue having an impact in the months ahead.

Monthly fluctuations in consumer credit and deposits reflect the behaviour of families repaying as much as they spend on credit cards and using their current accounts for expenditure.”

Net mortgage lending declined sharply in August as lower gross lending combined with higher than usual repayments. The annual growth rate declined from 12.0% to 11.4%.

Gross lending in the month was 5% lower than in July and 27% lower than a year earlier.

Approval activity continued to decline during August, particularly for remortgaging.

Approvals for house purchase were similar to July’s low level, some 64% lower than a year ago.

Approvals for remortgaging in August were 28% lower than last year and the lowest since early 2001.

Approvals for equity withdrawal & other purposes were 35% lower than a year ago.

Annual growth in credit card borrowing increased from 7.0% to + 8.2%.

Borrowing on overdraft fell slightly and gross unsecured loans remained subdued.

Personal deposits rose by just £0.3bn in August after a small fall in July to continue the pattern of weaker deposits seen in the last few months.

The annual growth rate fell to 4.0%.

Lending to non-financial companies was dominated by real estate and transport storage and communications. There was a net repayment of borrowing from business services sector (legal,
accountancy & consultancy) and wholesale & retail trade.