Consumer credit is particularly weak

January’s gross mortgage lending was £16.6bn, 15% more than the £14.5bn in January 2006. In line with seasonal patterns, January was well down on December’s £18.1bn, according to the British Bankers’ Association (BBA).

There was an underlying total of 141,200 mortgage approvals (for all purposes) in January. Due to the one-off removal of around 7,000 long-outstanding approvals, the reported number, which gives a slightly false impression, is lower, at 134,200 with an aggregate value of £13.1bn. The average loan approved for house purchase was £146,700, some 16% higher than a year earlier.

Underlying net mortgage lending (gross lending minus repayments and redemptions) rose by £5.6bn, in line with the recent average, compared with December’s increase of £5.7bn.

The annual growth in net mortgage lending continued at around 14%.

Credit card borrowing fell by £0.5bn in the month while other loans and overdrafts rose by just £0.2bn (revised).

David Dooks, BBA director of statistics, said: “January saw a continued stable demand for mortgages. Actual borrowing on mortgages remains strong compared with this time last year, so the impact of higher interest rates has yet to feature.

Prudent repayments, particularly on credit card accounts, are keeping the unsecured credit picture very subdued.”

Mortgage Lending

Following the strong volumes in November, net loan approvals reported in January (particularly for house purchase) were lower, partly due to higher than usual number of cancellations of expired approvals. When compared to January 2006 and allowing for the one-off cancellations, house purchase approvals were down 1% by number and up 16% by value. Remortgaging approvals were down 6% by number and up 8% by value; whilst approvals for equity withdrawal were 10% higher by number and 9% higher by value.

Consumer Credit

New borrowing on credit cards totalled £7,239mn in January; 7% lower than January 2006. After seasonal adjustment, net lending decreased by £496mn.
New lending on personal loans and overdrafts in January was higher than in December and after seasonal adjustment, net lending rose by £226mn (revised) compared with a recent monthly average of +£330mn.