Gross lending slows

Robyn Hall

October 29, 2012

Total lending to individuals (excluding student loans) rose by £1.7bn in September, compared to the previous six-month average increase of £0.6bn. The 12-month growth rate was 0.7%.

Within total lending, lending secured on dwellings rose by £0.5bn in line with the previous six-month average. The three-month annualised growth rate rose to 0.4% whilst the 12-month growth rate was unchanged at 0.8%.

Repayments in September totalled £11.2bn, a slight decrease on the six-month average of £11.3bn.

House purchase approvals rose to 50,024, surpassing the previous six-month average of 48,832 while remortgage approvals increased to 28,343 – some 679 approvals higher than the previous six-month average.

The number of approvals for other purposes increased slightly in September to 16,017 but remained below the previous six-month average of 16,936.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The uptick in lending seen in September is caused by a number of factors: increased loan availability, better rates as a result of the Funding for Lending scheme and increased confidence among buyers. Some more realistic pricing from vendors keen to shift stock that has been hanging around for a while is also helping.

“The end of the double-dip recession illustrates that the economy is very much on the right track, which is crucial for consumer confidence, and should have a further positive impact on the housing and mortgage markets.

“While house prices have been flat and bumping along the bottom in many parts of the country over the past year, there is positive news on the mortgage front. Even though many lenders have yet to draw down money via the Funding for Lending scheme, money market rates have fallen with some fantastic deals launched in recent weeks, particularly for those with sizeable deposits or similar levels of equity. We now need some of this to filter through to higher LTV deals, so that first-time buyers enjoy more choice at cheaper rates.”

And Paul Hunt, managing director of Phoebus Software, said: “This has been a good month for the market. Not only has Britain’s economic health been perking up after a prolonged period of financial uncertainty, lending has jumped far above average. Banks have been under fire for too long for not lending enough.

“Well, these figures show lenders are doing their bit to support the property market. While no one is going to deny that conditions still make the prospect of homeownership a distant reality for many potential first time buyers, lenders are offering an excellent range of mortgage products to the wider market. While it’s too early to predict the true extent of the effectiveness of the government’s Funding For Lending scheme, it should help drive up lending further still.”

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