Loans to businesses increase

Tim Wallace
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LENDING to non-financial companies increased over August, though banks reduced their holdings of corporate securities by a greater amount, the Bank of England announced yesterday.

Businesses borrowed £800m more in August than in July. However, overall lending from banks fell by £2.7bn as banks reduced their holdings of corporate securities.

The Bank of England’s figures do not show whether this was because of a fall in new securities issuance relative to the quantities maturing or because the banks were deliberately cutting total exposure to corporate debt.

However, figures from Dealogic show corporate bond issuance halved in August compared with July – down to £1.11bn from £2.28bn – which may account for some of the fall in securities holdings.

Meanwhile, bank lending to individuals increased by £1bn over August. Mortgages made up £0.5bn of that, while consumer credit made up the other half. Credit card lending remained unchanged month-on-month, with the increases focused on other loans and advances.

Last night Confederation of British Industry (CBI) chief John Cridland called for further measures to help first time buyers.

“The average age for home buyers without parental assistance is now 37 and is expected to climb to 43 as more people struggle to raise hefty deposits. Now is the time to stop the stagnation and get the housing market flowing again,” he announced at the CBI’s north east annual dinner.

“The CBI wants to see a revitalised Mortgage Indemnity Guarantee, to reduce the risk of higher loan to value mortgages.”