Mortgage lending up in August Wednesday, 30th September 2009

Mortgage lending bounced back during August after being negative for the first time on record during July, according to the latest figures from the Bank of England.

The figures are based on net lending - which does not take into account redemptions and repayments. This rose by £0.7bn and was the highest level since February.

In July homeowners repaid £203m more than was advanced. However the 12-month growth rate continued to fall by 0.1% to 0.8% and the three-month annualised growth rate remained at 0.2%. Within total secured lending, secured lending by banks excluding the effects of securitisations increased by £2.7bn, above the £2.3bn increase in July. The number of house purchase approvals stood at 52,317, in line with the July figure and above the previous six-month average.

On the other hand, both remortgaging approvals and loans approved for other purposes fell. Remortgaging approvals dropped to 29,059 from July’s figure of 33,880 and loans approved for other purposes totalled 26,256.

It is comforting to know that the negative reading recorded in July proved to be a one-off. In general the demand for mortgages is continuing to grow relatively strongly. However, what is making it difficult to satisfy demand is the scarcity of mortgage finance and the lack of appropriate properties in some parts of the country.