Lending figures buoyed by remortgages

Wed 29 Aug 2007

The number of new mortgages taken out in July declined, but a busy month for remortgages kept lending figures high, figures showed today.

There were 66,695 approvals for house purchases over the month, the lowest number in three months and down from 75,318 in June, said the British Bankers' Association (BBA).

However, the figure was only slightly lower than the 67,412 approvals for purchases in July last year, suggesting that seasonal trends rather than rising interest rates may be behind the fall.

A total of £21.5bn was lent for all mortgages through the month, of which approvals for house purchases were worth £10.5bn.

House buyers borrowed an average of £156,900, 13% more than in July last year, an increase that outstripped the 11.2% annual rise in house prices recorded by Halifax .

A total of 182,950 mortgages were approved over the month, with the number of remortgage approvals reaching 68,814.

The BBA's director of statistics, David Dooks, said: "With customers seeking to replace deals or fix their mortgage costs, increased remortgaging activity boosted the banks' lending in July.

"Lower approval volumes simply reflected the seasonal pattern, so we expect the stable trend in the banks' lending to continue over the next couple of months."

The BBA's figures for unsecured borrowing showed a £0.2bn rise in the value of personal loans and overdrafts taken out over the month.

There was also an increase in spending on credit cards, with £7.6bn put on plastic during the month, 8% more than July last year.

However, repayments on cards and seasonal adjustments meant net lending was down by £82m over the month.

Mr Dooks said: "Because cardholders are at least matching their spending with repayments, card borrowing continued to decline."

Source: http://money.guardian.co.uk/news_/story/0,,2157516,00.html