Approvals slow in August

Sarah Davidson

October 18, 2012

Meanwhile the availability of secured lending to households increased significantly in the three months to beginning of September.

Conditions in longer term wholesale funding markets improved during quarter three of 2012 however credit availability across all business sizes remained the same, said the Bank.

But official data covering lending by all UK-resident banks and building societies indicated that lending to businesses fell by over £2bn over the three month period.

The annual rate of growth in the stock of lending to UK businesses was negative in the three months to August while lending to small and medium-sized enterprises and large businesses also contracted over this period.

Contacts of the Bank’s network of agents noted that credit was available for larger firms, especially those with strong balance sheets but some smaller firms continued to report that they were unable to obtain credit.

David Brown, commercial director of LSL Property Services, said: “The mortgage market has been subdued in the last three months to say the least, and it’s clearly too soon to see any pick-up in the number of house purchase loans on the back of the Funding For Lending Scheme.

“There have been encouraging signs that rates have been coming down, but the key focus for lenders in coming months should be to ensure these rates are accessible to a deeper pool of borrowers, not just the wealthiest or the limited number that can meet their stringent criteria at present.

“Unless lenders can divert the cheap funding from the FLS towards the lower end of the market, we’re unlikely to see a meaningful recovery in first-time buyer numbers or a housing market recovery from the bottom up, easing the pressure on the private rented sector.”

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