British Banking Association releases figures

Amanda Jarvis

February 21, 2003

Net sterling lending, after allowing for a mortgage securitisation and write-offs, increased by an underlying £11.6bn (+1.3%) to £890bn in January. This was more than double December’s +£5.4bn and above the recent monthly average of +£9.0bn.

Total lending to individuals rose by £6.0bn. This continues a very gradual slowdown from November’s peak of +£6.4bn. Underlying mortgage lending increased by £5.4bn, compared with +£5.1bn in December, though this was not as strong as last October (£5.6bn) or November (£5.8bn). Although card borrowing saw its strongest monthly rise (+£0.4bn) since May 2000, it was accompanied by very subdued personal loan demand (+£0.2bn).

Lending to the financial sector, in large part reflecting short-term lending to securities dealers, rose by £3.9bn.

For the non-financial sectors in the economy, lending to real estate was again the most notable, rising by £1.3bn, and construction company demand also held up. Other categories seeing increased lending were hotels & restaurants, wholesalers and agriculture, though lending to manufacturers fell sharply (-£0.5bn), reflecting net repayments from food, beverages & tobacco companies and miscellaneous manufacturers.

January saw total deposits rise by £3.5bn (+0.6%) to £619bn. This was higher than December’s rise (+£2.8bn), and was more than accounted for by increased personal deposits that almost matched the very strong inflow in November.

Ian Mullen, chief executive of the BBA said:
“Despite a slowing housing market, mortgage lending remained strong in January, whilst consumer credit was subdued. These figures suggest that people are continuing to use equity withdrawal rather than personal loans and overdrafts for their borrowing needs. Credit cards might also have been used as an alternative to personal loans, which saw the smallest monthly increase since late 1999. Therefore, this picture appears to reflect decisions by consumers to minimise their borrowing costs. Additionally, personal deposits are recovering well after increased cash spending in December. In summary, individuals appear to be actively managing their finances.”

Sign up to our daily email