NUMBER of mortgages approved by the UK’s banks dipped in October for the first month since February, despite a huge increase in the last 12 months.
Data released by the British Bankers’ Association yesterday shows that approvals have exploded since October 2012, with lending up by a third in the past year alone.
The recent recovery in the housing market, which has driven London property prices up by a tenth, has been credited with much of the lending spike.
Despite the rapid recovery in the housing sector, last month saw a small slowdown in the number of loans approved for both house purchases and remortgaging, down from 75,077 to 74,743. Most of the lending is for new purchases, which accounted for 42,808 of the loans approved.
Business lending also shrank slightly in October, with loans to non-financial firms down by £940m from September’s level, with outstanding borrowing now at £280.7bn.
Credit card lending, which the BBA says has also risen reliably each month since the first quarter, fell back by £393m last month, down to £38.4bn.
Yesterday, a report from PwC suggested that most of this year’s increase in unsecured lending was stemming from an increase in student debts, rather than other personal lending, which is still broadly stagnant.
Howard Archer, chief UK economist at IHS Global Insight commented: “It remains to be seen if October’s relapse in lending was at least partly a correction after the jump in lending in September but it is nevertheless a setback to hopes that banks are now becoming more prepared to lend to businesses given the improved economic situation and outlook.”