First dip in net mortgage lending since counting began, say banks

Ben Southwood
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NET MORTGAGE lending fell in May for the first time since the British Banking Association (BBA) began measuring the figure in 1997, the financial sector industry group said yesterday.

With capital repayments outpacing stable gross lending, net mortgage lending dipped by £73m from April.

And mortgage approvals fell 3.4 per cent in the year to May. This represented a fall of 5.8 per cent compared to April, from 32,103 to 30,238.

Consumer credit also edged down by £0.3bn – the same rate that it fell in April – with repayment of overdrafts outweighing slight increases in credit card debt.

In industry, only hotels and restaurants grew their borrowing, whereas debt in property, construction, manufacturing and retail firms shrunk.

Re-mortgaging fell by 9.6 per cent, while other secured lending dropped 5.1 per cent.

Howard Archer, an economist at IHS Global Insight believes the data “indicates that underlying housing market activity remains weak following the limited boost provided by the stamp duty holiday that ended in March.”

Archer warns that “house prices are likely to drift around three per cent lower over the second half of 2012.” There is “significant danger that house prices could fall even more due to the problems in the Eurozone centred on Greece and Spain,” he added.