BBA reports another drop in mortgage lending

The British Banker’s Association (BBA) reported yesterday that mortgage lending has fallen for the third month to 31.767 mortgages approved in August, down from 34,219 in July.
Gross mortgage lending of £8.1bn in August was 7.6% lower than a year ago. However, high street banks continued to see fairly strong mortgage repayments, so that net mortgage lending increased by £2.5bn in August compared with £3.3bn for the same month in 2009. Despite large numbers of properties coming onto the market, August house purchase approvals were weaker than recent months, reflecting low demand.
The average value of house purchase approvals (£143,500) fell again in August but was still some 3.8% higher than a year ago. Numbers of approvals for remortgaging have been slightly stronger in the last two months while those for equity withdrawal have remained at similar levels to July and the previous six months average.
BBA statistics director, David Dooks said: “Demand for mortgages continues to be weak despite more properties reportedly coming on to the market. Even with stable or falling house prices the current economic climate makes it unlikely that demand will pick up in the near future.”
The BBA surveyed the main high street banking groups, which account for some two-thirds of all UK mortgage lending outstanding. They include the six largest UK retail lending groups: Santander UK (including Alliance & Leicester and Bradford & Bingley deposits), Barclays, HSBC Bank, Lloyds Banking Group, Northern Rock and Royal Bank of Scotland Group. Earlier this week the Council of Mortgage Lenders reported that mortgage lending fell by 14% to £11.4bn in August from £13.3bn in July, resulting in the lowest August total since 2000. The CML warned consumers to prepare for a "difficult second half of the year"
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