Secured borrowing increases in the UK
Latest figures show that mortgage approvals by the major banks increased to a 15-month high in June, according to the British Bankers’ Association (BBA).
The figures show that 35,235 mortgages were approved for house purchases in June, up from 31,919 the previous month. The figures reflect the banks’ increased ability to lend and is 65% up on the same month a year earlier. However, the appetite for remortgaging and for borrowing with other loans remains subdued, the group said.
The increase in mortgage approvals raises hopes that there will be subsequent rise in activity in the property market.
The BBA’s statistics director has said that approvals have been recovering from a very low level since last November, but he suggested that the pick-up in mortgage lending by the major banks was in sharp contrast to a contraction in lending by other home loan providers.
Howeve, some analysts remain to be convinced that there has been a significant shift in the housing market.
The average value of a mortgage being approved by the major banks stands at £136,400, nearly 11% lower than last year, reflecting falls in house prices. Gross mortgage lending rose slightly, the first increase since April 2008.
The number of approvals for remortgaging rose slightly in June, compared with May, to 28,133, but this was down 52% on a year earlier.
In related figures, the BBA said that spending on credit cards remained stable, with people paying back as much as they were borrowing on plastic. However, personal loans, often for big purchases such as a new car, fell by £1.3bn in the first six months of the year.
The lesson from these last figures seems to be that customers are demonstrating their lack of appetite for unsecured borrowing. This will remain the case as it makes sense for both sides, the lender and the borrower in the current climate.
