Banks' mortgage lending up in May
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Figures released today from the British Bankers Association show gross mortgage lending rose slightly in May, reaching £9bn, compared to £8.3bn in April.
The annual growth in the banks’ net mortgage lending of 4.3% , unchanged from last month, still substantially exceeds annual growth of just 0.9% in April for the mortgage market overall.
Repayments continued to be stronger than usual as banks and money advisers are encouraging borrowers to use surplus cash to reduce their borrowing where possible.
However, net mortgage lending grew by £2.6bn in May compared with £1.9bn in April.
The high street banks are currently providing over 70% of approvals for house purchase, compared with around 55% three years ago.
Numbers of remortgaging and equity withdrawal approvals continue to be lower than a year earlier.
David Dooks, statistics director at the BBA, says: “High street banks are the main providers in the mortgage market, supplying 75% of all new lending and approving more than 35,000 loans for house purchase each month.
“The low interest rate environment is resulting in customers choosing to reduce or pay off borrowing, particularly personal loans, rather than saving.
“Lending to non-financial companies continues to be slow as demand for loans remains subdued.”
Andrew Montlake, director of mortgage broker, Coreco, says: “Now that the Budget has been delivered and we know exactly what we are up against I would expect lending to continue to improve throughout the remainder of the year, albeit slowly. The May figures show a stable market but one that is at least moving in the right direction.
“Mortgage rates are lower than they have been for quite some time, competition is slowly returning to the market and the abolition of HIPs has meant that there are more properties available for sale.
“Remortgage activity, while remaining low, has slowly begun to improve as borrowers are increasingly tempted by low fixed rates.
“Even the buy-to-let market, now that Capital Gains Tax changes are not as bad as first feared, is looking positive.”
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