Gross mortgage lending in June 2.1% higher than last year

Written by Oliver Wade
25/07/2018

Estimated gross mortgage lending for the total market in June is £23.5bn, 2.1% higher than the figure recorded last year, according to the latest UK Finance Household Finance Update – June 2018.

However, while the amount lent increase in the month, the number of mortgage approvals by the larger high-street banks in June dropped by 2.1% compared to the same month last year. Despite this, remortgaging approvals increased and were 3.4% higher than in June last year. Though this increase was offset by the 4.7% fall in house purchase approvals and a 4.3% fall in other secured borrowing.

Furthermore, the report found that credit card spending was 4.7% higher than in June 2017, with outstanding levels of card borrowing having grown by 5.6% over the year, while outstanding overdraft borrowing was 5.8% lower than it was in the same period last year.

UK Finance revealed that personal deposits grew by 1.3% in the last 12 months, with deposits held in instant access savings account being 4.2% higher than a year earlier.

Commenting on the findings, UK Finance managing director of personal finance Eric Leenders said: “Lending to households has continued to grow modestly in line with recent trends, with increased borrowing on credit cards mirrored by a fall in overdraft borrowing.

“Card spending saw relatively strong growth year on year, with retail sales buoyed by the sunshine and recent sporting events.

“Meanwhile growth in mortgage lending continues to be driven by remortgaging, as borrowers take advantage of attractive deals ahead of an anticipated Bank rate rise.”

This view was echoed by Landbay CEO John Goodall, who stated that June was “another strong month for gross mortgage lending”.

“Any signs of a summer slowdown were offset by a sudden rush to lock into the attractive deals on the market, with a rate rise on the cards for the coming months if not weeks. This has no doubt lit a fire under first-time buyers and those coming to the end of fixed-term mortgages in particular,” he added.

“While overall lending grew, we cannot ignore subdued activity among home movers. Rising house prices and substantial stamp duty costs have stumbled the market and sales remain significantly low. All eyes are now on the new housing minister to offer a long term plan for growth in the market, including concrete plans for greater construction to enhance affordability and encourage movement in the market.”

Foundation Home Loans director of marketing Jeff Knight stated that: "Predictions for an August rate rise may have dampened slightly, with inflation stalling and house prices rising at the slowest pace for 5 years last month. Where this might impact those who were hopeful to bag competitive mortgage deals before the rise, activity from homeowners remortgaging should help maintain overall market activity.

"With lenders offering borrowers more choice, it is clear the changing demands of the market are being met, reflecting the tendency to browse offers before opting in. We are continuing to see specialist cases take up a larger portion of the market, proving demand from buyers persists, in spite of any political or economic uncertainty."

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