Buoyant mortgage market demand stabilises, says BBA

Latest figures from the Major British Banking Groups, for July, show that total net sterling lending increased by £7.1bn (+0.8%) to £842bn, while mortgage lending was up £4.7bn.

This compared with June&#39s underlying total rise of +£8.7bn and the recent monthly average of +£8.0bn. Mortgage lending was up from June&#39s underlying rise of £4.1bn and the recent underlying average of +£4.3bn, but not as high as the record £5.2bn increase seen in May.

July saw a rise of £5.7bn in lending to individuals. July saw an increase of £211mn in credit card borrowing, below the average rise of £250mn in the previous six months.

The financial sector repaid £0.9bn, reversing around half of the previous months increase in lending. There was increased corporate demand in the non-financial sector (+£1.9bn in total). Real estate companies, hotels & restaurants, transport, storage & communication companies and water companies all increased their bank borrowing.

Total deposits increased by £1.5bn (+0.3%) to £600bn, following the rise of £1bn in June. Personal deposits, with the lowest inflow since December 2001, accounted for £0.5bn of the increase.

Ian Mullen, chief executive of the BBA says: “Following June&#39s lower mortgage figures, which were affected by the long Jubilee holiday, July saw a rebound, although not to the record level seen in May. Assessing June and July together, suggests that the major banks&#39 mortgage lending growth may be stabilising. Other personal borrowing was slightly weaker than we have seen recently, with credit card spending effectively being matched by repayments.

“Real estate companies were once again the heaviest corporate borrowers, but it was a different story in the wholesale and retail sectors where there was little demand for finance.”