MORTGAGE BORROWING RISES AGAIN
ON THE UP: Lending
By Julia White for express.co.uk
THERE was more positive news for the housing market today as mortgage borrowing increased again.
Homeowner borrowing increased in September while the number of loans approved for house purchase also grew, figures showed today.
Net lending, which strips out redemptions and repayments, reached £922 million, according to the Bank of England, but the figure was weaker than August’s revised £1.28 billion.
The number of mortgages approved for house purchase rose to 56,215 from the previous month’s figure of 52,970, suggesting the recent improvement in the housing market will continue.
Today’s figures show a downward revision of July’s data, indicating that homeowners repaid £292 million more than was advanced in the month.
This was the first time lending had been negative since the Bank began collecting data in its current format in 1993.
September’s mortgage approval numbers are the highest since March last year.
But there was a further fall in the number of homeowners remortgaging, with those switching to a new deal dropping by 10 per cent compared to August, to 25,528.
Overall lending through unsecured credit, such as credit cards, loans and overdrafts, was negative for the third month in a row.
Consumers repaid £262 million more than they borrowed through unsecured debt in the month.
Within this total, outstanding credit card debt rose by £79 million - a nine-month low - while money owed on loans and overdrafts fell by £341 million.
Analysts said that while today’s mortgage figures were positive, they should not be viewed as a sign that the housing market was out of the woods.
Vicky Redwood, UK economist at Capital Economics, said the rise in the number of mortgage approvals for house purchase was stronger than the recent data suggested.
“But the rise needs to be put in context - approvals are still around 60% down on their peak and point to renewed falls in house prices,” she said.
Howard Archer, chief UK and European economist at IHS Global Insight, said the figures implied that mortgage activity “continues to firm” from the record low seen in November last year.
“Nevertheless, this must be put into perspective,” he said, adding that monthly approvals of around 70,000 to 80,000 are considered to be consistent with stable house prices.
He said the repayment of unsecured consumer credit was the consequence of a desire to reduce debt, as well as low demand for credit and a lack of loan availability from banks.
“Elevated and rising debt levels mean that there is an urgent need for many consumers to improve their balance sheets, while still serious concerns over jobs and the economic outlook are causing a substantial number of people to want to save more,” he said.
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