Total sterling lending to the UK private sector showed an underlying net increase of £10.8bn (+1.1%) to £996.6bn. This was stronger than both April’s rise of £9.1bn and the average rise for the previous six-months of £10.5bn.
Mortgage lending rose by £4.9bn. This was the smallest monthly rise since last November and compared with the average over the previous six months of +£5.6bn. Growth in unsecured personal lending (+£1.0bn) was virtually the same as in the previous month, again with strong card borrowing (consistent with April/May’s retail sales) offset by lower demand for personal loans.
Overall lending to non-financial companies expanded by £3.8bn. Lending to real estate companies at £1.6bn was the strongest rise in the last 12 months.
Lending to non-bank financial intermediaries rose by £0.4bn, as substantial repayments by securities dealers (-£1.5bn) and investment and unit trusts (-£0.7bn) were more than offset by increased lending to miscellaneous intermediaries (+£2.7bn).
Deposits from the private sector rose by £7.0bn (+1.0%) to £699.4bn. Of the rise, personal deposits accounted for £1.9bn, much in line with the recent average.
David Dooks, BBA director of statistics, said:
"After several months of buoyant mortgage lending, it would be premature to conclude, just on the basis of weaker lending in May, that the market is moderating. Consumer credit overall was much in line with the current average, with credit card lending being slightly stronger than average and other loans slightly weaker. In the corporate sector, continued strong lending to property companies was the main driver of the data."
Analysis of MBBG sterling lending to UK public and private sectors
Lending to individuals (after allowing for securitisations, loans acquired from special purpose vehicles, transfers, acquisitions, etc – see Note 4 below)
Net lending rose by £5,807mn in May, compared to £7,101mn in April and +£5,758mn in May 2003. Mortgage lending accounted for £4,862mn of the rise. This was the smallest monthly rise seen since November and compared with April’s +£6,106mn. The overall rise in consumer credit was slightly weaker than the previous month with card borrowing at £583mn about the same as April, though much stronger than the average for the previous six months (£363mn), however lending through loans & overdrafts continued to be subdued.
Lending to financial firms
Lending to financial companies rose by £417mn, largely as repayments of short-term lending to securities dealers (-£1,471mn) and investment & unit trusts (-£741mn) were more than offset by increased lending to other financial intermediaries (+£2,426mn) and insurance companies and pension funds (+£301mn).
Lending to non-financial firms
Lending to real estate continued to be strong, increasing by £1,605mn. There were also noteworthy increases in lending to wholesalers (+£151mn) and miscellaneous manufacturers (+£278mn) but most categories saw little change.
