Mortgage lending figures plunge in July

Bank of England report shows mortgage lending at it’s second lowest level since records began.
Mortgage lending fell sharply in July as activity in the housing market remained subdued, according to Bank of England figures released today.

Net lending totalled £86m for the month, down from June’s £518m and the second-lowest monthly lending figure since the Bank’s records began in 1993, although there have been two months when net lending was negative.

The number of mortgages approved for house purchases edged ahead slightly during the month, rising to 48,722 from 48,562, well down on the levels of more than 100,000 a month seen during the housing boom. The figure was also down on the high of slightly more than 59,000 in November.

Meanwhile, net lending by mutuals remained in negative territory at -£379m in July compared with -£432m in June, according to the Building Societies Association (BSA). Adrian Coles, director-general of the BSA, said: “There remain significant challenges such as heightened uncertainty about job prospects and household incomes, potentially limiting future demand. This could make it difficult to sustain the growth in activity.”

There was a slight increase in the number of people remortgaging during July, the Bank of England said, with approvals for those switching to a new deal reaching 26,951, slightly up on the previous six-month average, but there was a small dip in those unlocking equity from their home or taking up a buy-to-let mortgage.

Unsecured borrowing also remained subdued during July, with net lending rising by £173m. Within the total, credit card borrowing rose by £213m, but lending through loans and overdrafts contracted by £41m.

The BSA also announced that, excluding interest added to accounts, £1.3bn was withdrawn from savings accounts at mutuals in July, compared with £0.3bn in June.