Mortgage approvals remain low

In September, net mortgage lending rose by £3.6 billion; more than in August but below the average for the previous six months, according to the British Bankers’ Association (BBA).

The number of approvals for house purchase remained low but those for remortgaging were slightly higher. Consumer credit was subdued, rising by just £0.1bn, and personal deposit growth was stable.

BBA statistics director, David Dooks, said of the latest data: “It was not surprising to see continued low levels of mortgage lending and approvals in September, ahead of the Government's banking support announcements. Compared to a year ago, the mortgage environment has changed significantly, with supply restricted as a consequence of the situation in financial markets and demand at a much reduced level. But in a mortgage market that is becoming more concentrated, the high street banks provide more than two-thirds of all new lending.

“Pressure on household budgets, the slowing economy and fragile consumer confidence are suppressing consumer appetite for unsecured borrowing, but personal deposits across the high street banks held up.”

Net mortgage lending increased in September after much weaker growth in August; however the annual growth rate again declined from 11.3% to 10.7%.

Gross lending in the month was 13% lower than in August and 39% lower than a year earlier. Approval activity increased slightly during September, but was below the average of the previous six months.

Approvals for house purchase in September were slightly higher than in the last two months though still, some 15% lower than the average of the last 6 months.

Approvals for remortgaging in September were 9% higher than last month but lower than the recent average.

Approvals for equity withdrawal & other purposes were 4% lower than in August.

Growth in credit card borrowing was weaker than recently and the annual growth rate declined from 8.2% to 6.8%.

Although borrowing on overdraft rose slightly, overall unsecured borrowing remained very subdued.

Personal deposits rose by just £1.1bn in September after a small rise in August to continue the pattern of weaker deposits seen in the last few months. However the annual growth rate rose slightly to 4.1%.