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Mortgage approvals weaken in the face of rising costs and prices

Housing-Market / UK Housing Apr 12, 2007 - 08:54 PM GMT

By: Submissions

Housing-Market Following last week's release of MBBG net lending figures for February, further information now available on lending to individuals shows that:


  • February's gross mortgage lending was £14.9bn, 7% more than the £14.0bn in February 2006. In line with seasonal patterns, February was well down on January's £16.6bn.

  • There were 167,000 mortgages approved (for all purposes) in February. Earlier house purchase approvals data have been re-stated from last months release to allow for the one-off cancellation of about 5,000 approvals in January. The average loan approved for house purchase was £150,400, some 14% higher than a year earlier. It has taken just under 4 years for the average loan size to rise from £100,000 to £150,000, having taken around 9 years to double from £50,000 to £100,000.

  • Underlying net mortgage lending (gross lending minus repayments and redemptions) rose by £5.2bn, less than the recent average of £5.7bn and Januarys increase of £5.4bn. The annual growth in net mortgage lending continued at around 14%.

  • Credit card borrowing was unchanged in the month, while other loans and overdrafts fell by £0.2bn.

    David Dooks, BBA director of statistics, said:

    "The UK's shortage of housing market supply is clearly evident in the mortgage approvals data. The last £50,000 rise in the average house purchase loan has occurred more than twice as quickly as the previous £50,000 increase. Demand appears to be moderating however, as the monthly number of house purchase approvals was lower than a year earlier for the third month running and net lending was below trend in February.

    Reflecting tighter conditions for personal disposable income, consumer credit continues to be weak."

    Mortgage Lending
  • When compared to February 2006, house purchase approvals were down 5% by number though up 8% by value; remortgaging approvals were up 6% by number and up 22% by value; and approvals for equity withdrawal were unchanged by number but 10% higher by value.
    Consumer Credit
  • New borrowing on credit cards totalled £6,224mn in February; 7% lower than February 2006. After seasonal adjustment, underlying net lending decreased by just £4mn.
  • New lending on personal loans and overdrafts in February was also lower than February 2006 and after seasonal adjustment, net lending fell by £183mn compared with a recent monthly average rise of £225mn.

    For further information, please contact:
    Brian Capon, Head of media relations (020 7216 8810 brian.capon@bba.org.uk )
    David Dooks, Director of Statistics (020 7216 8837 david.dooksd@bba.or.uk )

Notes to Editors:
1. The Major British Banking Groups (MBBG) account for some two-thirds of all mortgage lending outstanding and around 70% of gross lending. Additionally, they provide over half of all consumer credit outstanding and, within that, some 70% of all card credit. They include twelve of the fifteen largest mortgage lenders in the UK: Abbey, Alliance & Leicester, Barclays and Woolwich, Bradford & Bingley, HBOS (through Halifax and Bank of Scotland), HSBC Bank, LloydsTSB (through Cheltenham & Gloucester), Northern Rock, Royal Bank of Scotland and National Westminster.

2. Statistical releases relating to the business of the MBBG are available on the internet in the 'News Room' area of the BBA website.

3. Figures shown for net changes in amounts outstanding are consistent with Table A4.3 of the Bank of England's Monetary & Financial Statistics, which shows lending to individuals by banks and building societies excluding the effects of securitisations and loan transfers. However from January 2005 the series are also adjusted to remove fluctuations arising from regular intra-group transactions between banks and their non-bank subsidiaries, thus providing a better indication of underlying trends in mortgage lending. This has resulted in a restatement of series published previously. Other figures are consistent with the comprehensive data for lending to individuals by all lenders due to be released by the Bank of England on 29 March 2007.

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