Mortgages at seven year high
Lending to companies and homebuyers on the rise
Lending to companies in now expanding and the mortgage market is at its highest for seven years, according to new data.
Gross mortgage borrowing of £12.8 billion in November was 28% higher than a year ago and the last two months have seen the highest monthly totals for seven years.
The number of mortgage approvals in November was 25% higher than a year ago, with remortgaging up 31% and house purchase up 20%.
Bank lending to companies is expanding, with November seeing lending growth in manufacturing, and the wholesale & retail sectors. Net capital market finance has raised £23.2 billion in 2015 so far, with larger companies using that as an alternative to loans and overdrafts.
Richard Woolhouse, chief economist at the banking lobby BBA, said: “These statistics show the continued strength of the mortgage market, with monthly new lending higher than at any time over the past seven years.
“Net lending to companies is now expanding, particularly in the wholesale and retail sectors, as businesses take advantage of record low interest rates.”
Annual growth in unsecured borrowing is at 5.7% with credit card borrowing up by 5.5% and other unsecured borrowing (personal loans and overdrafts) growing at 5.9%.
Annual growth in lending to non-financial companies (excluding real estate) has now moved into positive territory at +0.6%.
Gross mortgage borrowing was £12.8 billion in November, 28% higher than in the same month last year.
Remortgaging approvals moderated in November but were still 31% higher than November last year while other approvals were also 33% higher than a year ago. Approvals overall were 25% higher than at the same time a year ago.
Over the past year, net borrowing through personal loans has been rising at an annual rate of over 5%. Increased demand for personal loans continues to reflect better credit availability, low interest rates and stronger household finances.
Annual growth in high street banks’ credit card borrowing was 5.5% in November; exceeding growth in the wider (all issuers) credit card market which grew at an annual rate of 3.9%.
About 60 million credit cards are in issue, relating to 51 million accounts. About 67% of these were active at the end of November (i.e. carrying a balance relating to card spending and extended credit).
About 42% of all balances in aggregate incur no interest at all.
Larger companies continue to make use of capital market finance as an alternative to loan and overdraft borrowing from banks. They raised £23.2 billion in the first eleven months of 2015.
The real estate sector has been actively reducing bank borrowing over the past three years and high street lenders have had active programmes to dispose of property loans.
Companies’ net borrowing fell by £300m in November with increased borrowing by the construction and wholesale & retail sectors but lower borrowing by the real estate sector and modest falls in lending to transport, electricity and manufacturing sectors.