April’s figures indicate that mortgage demand is moderating. In April 2007, gross mortgage lending reached GBP17.3 billion, up 12% compared to April 2006. However, this largely reflects 10% annual growth in house prices and strong re-mortgaging activity.
In the same month, 170,000 mortgages were approved, only 1% more than in April 2006, with an aggregate value of GBP19.1 billion. The average loan approved for house purchase was GBP152,800, some 9% higher than a year earlier.
Meanwhile, the British Bankers’ Association (BBA’s) also revealed that unsecured personal borrowing remains weak. Credit card borrowing dropped by GBP0.1 billion during April 2007, while borrowings on personal loans and overdrafts only saw a slight rise.
David Dooks, BBA director of statistics, said: The latest three months have seen net mortgage lending stabilize, with rises (albeit still around GBP5 billion a month) below the average of the previous six months. The picture from approvals points to mortgage demand weakening further as the year progresses and the cumulative effect of higher interest rates bites harder.
Another net repayment on credit cards means that repayments have exceeded cardholders’ spending in ten of the last twelve months, as they continue to run down their credit card borrowing.
