Mortgage approvals and lending strong with buoyant high street bank competition
(29 June 2015 – Britain) Mortgage approvals have steadily improved over the past five months, according to British Bankers’ Association (BBA) chief economist Richard Woolhouse.
“Household borrowing remains robust and this is indicative of the wider recovery we’re seeing in the economy,” he said.
“The increase in mortgage approvals this month is consistent with the trend we’ve seen since the start of the year.
The numbers show that the property market remains buoyant after the general election.
“Fierce competition between lenders means that there are some great mortgage deals available from the high street banks,” Woolhouse said.
“Personal borrowing by British families also seems to be strong – the uptake of personal loans and credit card borrowing is further proof of consumers’ confidence.”
Unsecured borrowing is growing at an annual rate of 5 percent; this is its highest rate since autumn 2010, reflecting strong consumer confidence.
Net borrowing by businesses has been positive in three of the past five months.
Gross mortgage borrowing in May was £10.4 billion (A$21.2 billion) – similar to April but 5 percent lower than in the same month last year.
After seeing slower demand in the second half of 2014, the overall mortgage stock is now 1.0 percent higher than a year ago.
Allowing for the effect of the new mortgage rules which slowed down the processing of applications last May, approvals overall were approximately 2 percent higher, year-on-year.
For house purchase approvals, the annual comparison, adjusted for the effect of the new rules, suggests a year-on-year comparison of -3 percent.
Similarly for remortgage approvals, the adjusted year-on-year comparison was around +14 percent and for other approvals, the adjusted comparison was about -2 percent.
Stronger demand for personal loans continues to reflect improved credit availability and stronger household finances.
Over the past two years, net borrowing through personal loans has been rising and has expanded notably over the past twelve months.
Annual growth in high street banks’ credit card borrowing continued at 5.0 percent in May and was largely in line with the wider (all issuers) credit card market which grew at an annual rate of at 5.2 percent.
Figures referred to as high street banks relate to the UK activity of 21 institutions across the banking groups of Barclays, HSBC Bank, Lloyds Banking Group, Royal Bank of Scotland Group, Santander UK and Virgin Money.