Mortgage lending drops in October

In October, net mortgage lending rose by £2.9 billion; less than in September and below the average for the previous six months, according to the British Bankers’ Association (BBA). The number of approvals for house purchase remained low while those for other purposes were similar to September. Consumer credit was subdued, rising by just £0.3bn, and personal deposits were flat.

BBA statistics director, David Dooks, said of the latest data: “The high street banks provided almost £12bn, or two-thirds of all new mortgages, in October. They also increased lending to non-financial companies by £1.4bn and heavily supported financial intermediaries (at the time Government was announcing its financial support for the banking industry). That support, together with lower interest rates, will feed through to lending and yesterday’s Pre-Budget Report measures will help consumer demand. Comparison of current lending levels with last year is obscured by the very different economic conditions that exist now, reflecting a much reduced appetite for borrowing. Mortgage approvals remained low, consumer credit was subdued and people used their deposits to fund spending in October.”

Net mortgage lending dropped in October as the annual growth rate declined from 10.7% to 10.5%.

Gross lending in the month was 3% higher than in September and 38% lower than a year earlier.

Approval activity decreased slightly during October.

Approvals for house purchase in October were slightly lower than the previous month.

Approvals for remortgaging in October were 1% higher than last month but still lower than the recent average.

Approvals for equity withdrawal & other purposes were 5% lower than in September.

Growth in credit card borrowing was in line with the recent average and the annual rate increased from 6.8% to 7.8%.

However, borrowing on overdraft dropped slightly and personal loan demand was weak so that overall unsecured lending remained very subdued.

Personal deposits dropped slightly in October after a small rise in September to continue the pattern of weaker deposits seen in recent months. The annual growth rate dropped slightly to 3.8%.