The British Bankers’ Association (BBA) today said that mortgage lending by its members had increased to record levels.
The group said that, during July, mortgage lending increased by £3.52bn, a jump of 11%, after repayments and redemptions had been taken into account.
Consumer credit, which includes loans, also increased, rising by £918m during July, compared to a jump of £821m in June.
However, credit card borrowing was subdued, rising by just £79m as more people paid their bills, suggesting that consumers can still afford to pay off their debts even though spending remains high.
Overall lending, including mortgages, loans and credit cards, rose by £9.61bn last month to £760.52bn.
BBA chief executive Ian Mullen said: “Higher mortgage lending in July partly reflects the introduction of new products by some banks, particularly forre-mortgaging, and may have resulted in the banks taking a greater share of the market, rather than being a reflection of an escalation in lending by all institutions.”
Commercial lending by BBA members to non-financial companies was stronger during July, boosted by lending to real estate companies, which was up by £2.57bn.
The part-privatisation of air traffic services also helped, with lending to the transport and communications sector rising by £525m, while lending to the financial sector rose by £661m last month.
However, the Building Societies Association (BSA) said today that its members saw a slowdown in new mortgage lending last month.
During July building societies lent £2.12bn in mortgages, compared with £2.28bn in June.
Once repayments and redemptions had been taken into account, lending increased by just £272m during July, compared with a rise of £589m the previous month.
Adrian Coles, director-general of the BSA, said that the drop may indicate a “new caution” among homebuyers, following media reports of a possible recession.
During July, people paid £7.04bn into building society accounts, but withdrew £6.73bn, leading to a net increase in deposits of £313m, down on last month’s rise of £427m.
This compared with an increase in deposits of £1.82bn reported by the BBA.
EGi News 20/08/01
