The number of loans approved for house purchase of 35,235 in June, up from 31,919 in May, was well ahead of the six month average of 27,528. Meanwhile there were 28,133 remortgages approved up from 25,825 in May, which was also ahead of the six month average of 27,744. For the year to the end of June loans for house purchase are up 64.7% while loans for remortgaging are down by 51.8%.
From the BBA's perspective there were modest increases in gross and net mortgage lending as a result of more new home loans being approved in recent months. Personal deposit inflows rose sharply in June but consumer credit was again subdued. Lending to other financial companies rose, while lending to non-financial companies remained weak.
BBA statistics director, David Dooks, said of the latest data: “Numbers of new home loans approved by the high street banks are recovering from the very low level last November and so far this year, gross mortgage lending has topped £50bn. After repayments and redemptions, the banks’ net rise in mortgage lending of £18bn in the first six months is in sharp contrast to lending by the rest of the market, which is still contracting. People are showing little appetite for unsecured borrowing and are generally keeping more money in their accounts.
“Borrowing by non-financial companies continues to be weak, either because funds raised on capital markets are replacing bank borrowing or because companies are seeking to withstand the recession by reducing their debt".
Kesh Thukaram, managing director of smartlandlord.co.uk commented: “It’s good news that lending volumes have come up a bit. This will help the housing market to stabilise, and should moderate further price falls. But rising unemployment and lenders’ limited access to funding will constrain the property market for some time. And these increases in lending are unlikely to help first time buyers or buy to let investors. They’ll continue to be penalised because of their perceived risk to lenders – they’re still marginalised at the moment. In the medium term though, first time buyers will find themselves with more financing options. Although this will mean fewer tenants trying to rent properties, their demand for property to buy will mean many reluctant landlords will now be able to sell off their properties. This should balance out demand and supply in the private rented sector.”
