Mortgage lending and consumer saving increase

Wednesday 23rd December 2009

Figures released this morning show consumers are paying off more of their debts, while the number of mortgages approved has also risen.

The British Bankers' Association (BBA) said consumer credit had contracted by 2.2 per cent over the last year, while there were 44,713 mortgages approved last month, up by 2,161 on the month before.

BBA statistics director, David Dooks, said: "Household priorities are showing up in the November figures. Demand for new personal loans was weak and people are paying off debt or building savings in response to economic circumstances.

"In the housing sector, prices have continued to edge up and approvals for house purchase are now back at a similar level to that of two years ago. Re-mortgaging activity continues to run at a low level as borrowers revert to low standard variable rates or trackers from maturing fixed rate loans.

"Lending to non-financial companies ticked up slightly in November, having declined in each of the previous two months."

In November, people paid back £300 million more in total than they took out in new credit. Gross mortgage lending in November, though some 12 per cent lower than a year ago, was slightly higher than last month.

Royal Institute of Chartered Surveyors (Rics) senior economist Oliver Gilmartin, said: "Today's numbers add further weight to our view that house prices will continue to move higher during early 2010.

"Lending from mainstream banks has returned to levels last seen two years ago, although remains around 30 per cent below the levels pre dating the credit crunch.

"The rise in demand continues to outstrip supply, although recent indications are that potential vendors that became 'reluctant landlords' at the start of the downturn, may be taking this improved pricing environment to place properties for sale."

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