Mortgage value rises while credit card borrowing tumbles

27 June 2007
Britain's banks lent more to mortgage customers in May, although total net mortgage lending across the board rose more slowly than in recent months, the British Bankers' Association (BBA) has announced.

Across the industry, the total number of mortgages approved was up just two per cent on figures for May 2006 at 204,800, suggesting that four successive quarter-point interest rate rises have begun to take effect.

But the average loan to customers was worth 13 per cent more, reflecting homeowners' need to levy larger loans in afford to afford the more expensive housing on the market.

Similarly, while remortgaging approvals rose by 13 per cent, their value rose by 25 per cent as customers struggled to afford remortgaging their homes.

Meanwhile, consumers were clearly reigning in their unsecured borrowing, as credit card borrowing fell by £0.4 billion during May and borrowing on personal loans and overdrafts fell by £0.1 billion.

"Credit card borrowing continues to slow down as consumers prefer to pay up front rather than borrowing to spend," commented David Dooks, the BBA's director of statistics.

In line with that trend, credit card spending also fell by 3.4 per cent compared to May 2006.

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