Mortgage Lending Increases

by Gill Montia

Story link: Mortgage Lending Increases

The British Bankers’ Association (BBA) has published figures showing that in May, mortgage lending increased by £5.8 billion, up from £5.1 billion in April. The increase represents the steepest rise over a six months period, during which the average monthly increase was £5.4 billion. At the same time seasonally adjusted data from the Buildings Societies’ Association shows net advances in May increasing to £1.2 billion, compared with £0.9 billion in April. The increases could be seen as providing evidence of a residual strength in the housing market, despite a slow-down caused by the four interest rate rises since August 2006. However, the association has also reported that mortgage lending is down year on year, and is likely to continue to decline during the remainder of 2007. It warns that a further rise in interest rates could have an impact into 2008.

Some official sources are showing a weakening in mortgage lending and approvals, together with a reduction in house price growth. However, continued strong house price inflation in the south east and Northern Ireland is broadly acknowledged.

Also, in terms of credit card lending, the BBA reported a £409 million reduction in May, compared to April’s decrease of £165 million. The figures are in line with an overall trend; credit card borrowing has decreased for 10 out of the last 12 months.