Mortgage lending back on track
MORTGAGE lending picked up in February, raising hopes that a recent slump in demand for property may be coming to an end. However, net credit card lending was down sharply.
Net mortgage lending for the month rose by £4.8bn, which is £600m stronger than January and £300m better than the average £4.5bn of the past six months, according to figures from the British Bankers' Association.
Further figures, published by the Council of Mortgage Lenders, showed total gross lending in February was pound;17.2bn, virtually unchanged from January's figure of £17.3bn but 18% lower than a year earlier.
'There is a strong seasonal trend to mortgage lending, with a marked fall in lending seen every year in January and February, so this flat trend in lending was expected,' said the CML.
The number of loans used for house purchase, as opposed to remortgaging, fell slightly from 63,000 loans in January to 59,000 in February - the lowest monthly figure since records began in 1998.
Signs that the property slowdown is easing broadly backs up claims from some recent house price surveys. Lender Nationwide said prices rose in February after recent monthly falls while indices from the National Association of Estate Agents and Hometrack have shown an easing in price falls that gripped the market in the second half of last year.
'The overall impression from the latest survey evidence and price data continues to be that the housing market is avoiding a sharp correction,' said Howard Archer, chief UK economist at research firm Global Insight.
The BBA played down the recovery, pointing to a slump in lending on credit cards. 'Despite low approvals in January, February's mortgage
lending was slightly higher than expected,' said David Dooks, director of statistics. 'However, it was only marginally above the recent trend and with demand for consumer credit subdued, particularly on cards, in line with weak retail sales, overall lending to individuals was very similar to recent months.'
Credit card borrowing showed only a £100m net rise, down from £400m in February. The BBA described the figure as 'very weak'. Net lending to individuals rose by £5.52bn in February, higher than £5.25bn in January, but down 11% on a year earlier.
Yesterday, figures from Office of National Statistics showed spending on the High Street was falling at the fastest pace for two years. Figures for the three months up to February fell 0.6% on a year earlier, encompassing crucial Christmas trading.
Shoppers helped keep the retail sector buoyant in 2004 through lending, mainly on credit cards and loans. Including mortgage debt, British borrowers now owe more than £1 trillion.
