Net mortgage lending rises in August

Posted: 27 Sep 2006 12:05:38 GMT

Gross mortgage lending in August this year soared to a record £20.9 billion, according to the BBA.

Gross mortgage lending in August this year soared to a record £20.9 billion, nine per cent higher than July's figure, the British Bankers' Association (BBA) reports.

Figures from the major British Banking Groups (MBBG) show that gross mortgage lending last month was 24 per cent higher than the £16.8 billion total recorded in August 2005.

The MBBG net lending figures for August 2006 show that mortgage lending remains strong, indicating strong levels of confidence in the housing market.

Underlying net mortgage lending (gross lending minus repayments and redemptions) also rose by £6.2 billion last month, up from £5.8 billion in July, above an average of £5.4 billion over the past few months and significantly higher than the total of £4.6 billion for August last year.

A number of studies have shown that mortgage levels and house prices rose last month despite a quarter point increase in the base rate of interest by the Bank of England to 4.75 per cent.

BBA director of statistics, David Dooks, commented: "Compared to the numbers of secured loans approved at the same time in previous years, August shows robust and stable demand orientated towards house purchase rather than for other purposes, though below the volumes seen in 2003."

The total number of mortgage approvals (for all purposes) last month was 184,557, five per cent lower than August last year. However, the aggregate value of £19.1 billion was four per cent higher than in 2005.

The average loan approved for house purchase in August 2006 rose eight per cent over the year to £141,500. Remortgaging approvals fell slightly compared with the previous year, while loan approvals for house purchase rose by three per cent in number and 11 per cent by value.

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