MortgagesOct 1 2014

BBA figures point to more cautious consumer

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House buyers remain cautious, with mortgage lending dropping below the £11.3bn monthly average seen in the past six months, the British Banking Association’s statistics director has said.

David Dooks said: “When customers feel more optimistic about the economic outlook, they are much more likely to take on new borrowing.”

According to the BBA’s latest monthly statistics, for August, new mortgage lending was 15 per cent higher year on year, with approvals for house purchase up by 6 per cent. However, remortgaging and equity release borrowing were down compared to August 2013.

The overall mortgage stock is still rising in response to stronger demand, up 1.4 per cent year on year.

Elsewhere, Isas and Nisas have seen a year-on-year drop in investment. A total of £4.9bn was invested in July when the Isa rules changed, plus a further £1.5bn in August.

However, total inflows for the year to date – £9.3bn – still lagged the £11bn of the same period last year.

The demand for unsecured personal loans has risen, which Mr Dooks said is often a sign people feel more confident about their finances.

The BBA said sustained growth in business lending is beginning to be seen in the manufacturing, retail and wholesale sectors. Overall net business lending to non-financial companies was up £1.5bn in August, compared with a £0.9bn drop in July.

Adviser view

Paul Dorward, mortgage adviser at Sheffield-based Pad Financial, said: “The findings fit with what I am seeing: we are busier with new mortgage products over refinancing. The general state of the economy has led to a feel-good factor, so people are inclined to push themselves now and fix at a low rate, especially with an interest rate rise on the horizon.”