Mortgage lending 'looks set to hold strong'

28 January 2004
Mortgage lending in the UK is expected to remain strong in 2004, according to the British Bankers' Association.

However, other forms of borrowing are showing signs of slowing down, as levels of consumer debt reach record highs.

The British Bankers' Association said the number of new home loans approved during December fell to their lowest level since January last year, but added that this was part of usual seasonal slowdown.

The group pointed out that the figures were stronger than in previous Decembers, with eight per cent more loans approved than in the same period of 2002, worth 26 per cent more.

Meanwhile, growth in consumer credit was more subdued. Although people spent £8.22 billion on their credit cards in the run up to Christmas, outstanding debt rose by just £158 million, following strong repayments.

Borrowing through loans and overdrafts increased by £510 million during the month, in line with the previous six month average.

"With the number of loans approved remaining strong for the time of year, lending growth looks set to remain buoyant into the early part of this year", BBA's David Dooks said.

"In contrast it is not clear whether consumer credit will follow suit."

"November and December rises in card borrowing were both subdued and, indeed, the annual picture shows overall consumer credit rising by less than in either of the two previous years, as consumers' preference to use secured borrowing options continue to substitute for traditional personal loans."