MBBG reveals weaker borrowing figures

Amanda Jarvis

January 20, 2006

During the year to December 2005, underlying net mortgage lending was £55.3bn, compared with £60.6bn in 2004.

The MBBG’s December figures also showed:

– Total sterling lending to the UK private sector showed a net underlying increase of £9.7bn (+0.9%) to £1,153bn. This was weaker than the previous month’s underlying rise of £11.3bn but in line with the average of +£9.8bn over the previous six months.

– Net underlying mortgage lending in December rose by an underlying £5.4bn; the strongest rise since June 2004, a little higher than November’s rise of +£5.2bn and well up on the average of +£4.6bn over the previous six months. Underlying growth in overall unsecured personal lending (+£0.3bn) was slightly stronger than November but lower than the average of the previous six months (£0.5bn). Of this, loans & overdrafts were virtually flat, well down on the recent average (£0.3bn), whilst credit card borrowing rose by just £0.2bn in line with the average for the last six months (£0.2bn). Underlying net consumer credit grew by £6.4bn in 2005 compared with £11.4bn in 2004.

– Although underlying lending to real estate companies was the largest component of lending to non-financial companies, rising by £0.9bn, there was little growth in lending elsewhere. Lending to miscellaneous manufacturers declined (-£0.3bn) and construction (-£0.5bn) showed the first fall since May 2004.

– Deposits from the private sector rose by £10.5bn (+1.3%) to £833bn. Of the total, personal deposits increased strongly by £3.9bn compared with average growth of £2.5bn in the previous six months.

David Dooks, BBA director of statistics, said: “Against a 2005 backdrop of overall lending to individuals being weaker than in 2004, mortgage lending strengthened in the final months of the year, but in sharp contrast, unsecured lending continued to be noticeably subdued.

“The strength of personal deposits during 2005, some 33% higher than 2004, has also been a symptom of cautious attitudes towards spending and borrowing by consumers.”

Analysis of MBBG sterling lending to UK public and private sectors

Net lending to individuals rose by an underlying £5,620mn in December, compared to £5,442mn in November and £5,470mn in December 2004. Mortgage lending accounted for £5,358mn of the rise, compared to November’s rise of £5,214mn. Within consumer credit, personal loans & overdrafts rose by £38mn compared to November’s £80mn, while net credit card lending rose by £236mn, slightly stronger than both November (+£158mn) and the average over the previous six months (+£158mn).

Lending to financial companies rose by £332mn in December mainly reflecting borrowing by investment and unit trusts (+£894mn) and insurance companies and pension funds (+£573mn) offset largely by repayments by other financial intermediaries (-£1,305mn) and leasing companies (-£306mn).

The main contribution to lending to non-financial firms came from underlying lending to real estate companies (+£860mn) by contrast there were repayments by hotels & restaurants (-£181mn) miscellaneous manufacturing (-£332mn) while construction (-£478mn) showed the first fall since May 2004.

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