Mortgage lending strengthens further

Nia Williams

January 26, 2010

According to the latest figures from the BBA, gross mortgage lending rose in December to be some 12% higher than a year ago and was boosted by borrowers bringing loans forward prior to stamp duty relief ending.

The banks’ annual growth rate of 4.6% in net mortgage lending substantially exceeded growth of just 0.9% for November 2009 across the market as a whole.

Overall approvals in 2009 were 980,000. This was some 27% lower than 2008 and the lowest since these data became available in September 1997. While approvals for house purchase in 2009 recovered somewhat since the low levels last year, a sharp decline in remortgaging reflected borrowers moving to lower standard variable rates when fixed deals expired and having little incentive to look for other lenders as rates are stable.

Commenting, BBA statistics director, David Dooks, said of the latest data: “The high street banks continued to lend substantial amounts in the weaker mortgage market of 2009 approving more than 440,000 loans for house purchase. Their share of gross lending went up from a historical level of about two-thirds to three-quarters, due to specialist lenders largely withdrawing from the market and building society finance contracting.

“Households’ unsecured borrowing contracted throughout the year, particularly on personal loans. After paying down debt, people sought to build up their savings.”

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