Lending to individuals rises

Category: Banking
Date: 7/30/2010

Total net lending to individuals rose by £0.6 billion in June, figures from the Bank of England show.

Within the total, net lending on secured dwellings increased by £0.7 billion, although this was slightly below the £0.8 billion increase in May and the previous six month average of £1.0 billion.

The number of loan approvals for house purchases totalled 47,643 in the month, also down on May, the previous six month average, and represents a fall of 6% on a year ago.

"This is the first time the annual rate has turned negative since April last year, but it is likely to remain so in future months as comparison is made with a rather stronger market towards the end of last year," commented Paul Samter, economist at the Council of Mortgage Lending.

The number of approvals for remortgages was 24,949, as providers continue to struggle to entice home owners from low standard variable rates, a trend that could continue for some time if the predictions of long term low interest rates are proved correct.

Some analysts have speculated that the base rate of interest could remain at the record low 0.5% until 2013 or 2014.

"This low demand is being driven both by the lack of demand among those existing borrowers enjoying low rates, and tighter criteria that may be constraining those borrowers who do wish to remortgage," added Mr Samter.

The amount of credit card lending increased by £0.1 billion – slightly below the six month average of £0.2 billion. In addition, other loans and advances fell by £0.2 billion.

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