Business

Winter spurt in mortgage lending, says BBA

Mortgage application form
Image caption Mortgage lending was at low levels throughout the year compared with the housing boom

Gross mortgage lending by the major UK banks reached its highest monthly level of the year in December, industry figures show.

Lending of £9bn was 12% higher than in December 2010, the British Bankers' Association (BBA) said.

However, householders continued to take a cautious approach to other forms of borrowing.

Repayments on unsecured lending matched the amount of new borrowing on loans, overdrafts and credit cards.

"The household sector generally is focusing on debt repayment amid inflated household expenses and a continuing air of uncertainty, so we see a reluctance to let net borrowing rise, with people preferring to use their bank account cash for expenditure," said BBA statistics director David Dooks.

There was a slight rise in the credit card sector of unsecured lending. The BBA said that this reflected the increase in year-on-year spending in the shops at Christmas. Even so, repayments still outstripped new borrowing on these cards.

Home loans

In the mortgage market, activity remained at the low levels of the last two years, despite the pick-up in gross mortgage lending in December.

The number of mortgage approvals for house purchases by the High Street banks did increase to 36,171 in December compared with November, although remortgaging did drop back slightly in the same period.

Over the year as a whole, the number of mortgages approved for house purchases was very similar to 2010, the BBA said. The number of approvals for remortgaging was up 3% in 2011 compared with 2010.

The average house purchase value was similar to 2010, at £145,200, the BBA said.

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