Mortgage lending down, consumer credit up

Mortgage lending down, consumer credit up

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The Bank of England has revealed that, in April 2011, the number of mortgages approved fell by 4% to 45,166 – that’s the lowest number for any April since records began in 1992. The number of approved remortgages fell by 10% in April compared to the previous month. Whilst many economists have cited the figure as indicative of a continuation of the depression in the housing market, others have suggested that bank holidays and the royal wedding were major factors.

A Mortgage Advice Bureau spokesman said that these events “inevitably skewed the April data”. He said the drop in mortgage approvals was expected, and also pointed out the figures started to pick up in May. At the same time, there was an acknowledgement that, compared with historic trends, growth remained modest.

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The Financial Services Consumer Panel (FSCP) has set out a 6-point plan for a “sustainable and healthy mortgage market”. It has expressed its belief that the Financial Services Authority’s Mortgage Market Review should include better regulation to help consumers; regulatory policy which takes wider social and economic implications into account; and would require lenders to evaluate affordability and suitability for individual consumers. The FSCP believes stronger regulation would curb the recklessness the banks have exhibited in the past.

Consumer credit actually went up by 500 million in April, Bank of England figures show. Credit card lending increased by 300 million and there was a 200 million increase in loans and other advances. These increases are lower than usual, however, and reflect a continuing cautiousness amongst consumers towards increasing their levels of debt.

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Building Society Association data shows that there was a 1.5 billion increase in savings held with mutuals in April. In April 2010m the month-on-month increase was just 0.9 billion. Much of this April’s increase was accounted for by a growth in deposits into ISAs. The fact that savings are on the increase suggests that people are keen to reinforce their financial security in an uncertain climate.

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