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MBBG reveals £1.5bn drop in August on July

However, the latest results were still 3.3% higher than in August 2003. After seasonal adjustment, the rise in net lending, gross lending minus repayments, of £4.4bn was the weakest growth since June 2002 and notably lower than the average of £5.6bn for the previous six months.

There were 201,700 loans approved in August, with a total value of £15.3bn. Approval numbers were 4.1% down on July and 15.1% weaker than August 2003. In particular, the number of loans approved for house purchase was 9.5% lower than July and 21.6% lower than August 2003 and they represented a lower proportion of all approvals than in July. The average approval for house purchase fell slightly, to £112,100.

Growth in overall net consumer credit was stronger than in July, rising by £1.2bn, seasonally adjusted, the largest increase since March. Credit card borrowing was stronger than in July, growing by £0.6bn, whilst demand for personal loans and overdrafts, rose by £0.6bn, slightly

above the average over the previous six months.

David Dooks, British Bankers&#39 Association director of statistics, says: “The slowing down of net mortgage lending in August looks set to continue in the next couple of months. A further weakening in the numbers of loans approved, particularly for house purchase and equity withdrawal in August indicates that households&#39 appetite for secured borrowing is moderating.

“However, consumer credit growth in August was stronger than in July, with card borrowing in line with relatively robust retail sales.”

August&#39s gross lending of £16,610m was 8.1% lower than July&#39s total and compared with £16,074mn in August 2003.

After declining slightly in July the growth in net mortgage lending slowed further in August. The seasonally adjusted rise was £4,404mn, well down on the average of +£5,557m over the previous six months.

Compared to the same month a year earlier, August&#39s approvals of house purchase loans were 22% lower by number and 16% lower by value; remortgaging loans were 6% lower by number and 1% lower by value; and equity withdrawal loans were 17% lower by both number and value.

New borrowing on credit cards totalled £8,074m in August. This was similar to both June and July though some 4.3% stronger than the average of the previous six months. Although repayments were also higher than average, the seasonally adjusted increase in net lending, of £582mn, was stronger than both July and the recent average.

New lending on personal loans and overdrafts, at £3,435m, was above the average for the previous six months. After seasonal adjustment, the rise in net lending was £611m, higher than the average rise of £513m over the previous six months, though following a weak figure in July.

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