Mortgage lending increased in October

New mortgage lending and house purchase approvals increased slightly, according to the latest figures from the British Banker’s Association. Mortgage lending continued to grow from the low levels at the end of 2008, but consumer credit continued to be weak and lending to non-financial corporates fell.

BBA statistics director, David Dooks, said of the latest data:

“The longer it takes to emerge from recession, the longer we will see households and businesses continue to borrow with caution. The banks’ mortgage lending, still growing by more than 4% a year, shows one aspect of consumer behaviour but unsecured borrowing is subdued and people are building up deposits.

“A mixture of lower business demand, alternative corporate funding and tighter lending conditions, all giving rise to the on-going contraction in lending to non-financial companies, is a reflection of current market conditions.”

Simon Rubinsohn, RICS chief economist, said:

“Although the availability of finance for homebuyers has increased a little in recent months with some evidence of a modest relaxation in the strict control on loan to value ratios for first-time buyers, access to the property market still remains challenging particularly given the rebound in residential prices in recent months. That said, the lack of supply of property coming onto the market is proving to be an increasingly important obstacle to a more meaningful pick-up in transaction levels.”

“Inevitably, the number of new instructions will remain fairly subdued into the year end but it is crucial that more fresh stock is placed with agents in the early part of 2010 to give the market a further boost. More importantly, this is critical to preventing a further sharp upward move in house prices.”