High street lending gloomy despite upturn: BBA

Data for December 2012 showed a marginal increase in credit availability and lower pricing, which David Dooks, statistics director for the BBA, attributed to the development of products using the government’s Funding for Lending scheme.

He said: “The FLS is expected to bring further benefits to households and businesses in 2013”, but added consumers were still holding onto deposits over 2012 and any new mortgage lending – which reached £92bn – was offset by £91bn of repayments.

Mr Dooks added: “Slow economic growth also continued to suppress new borrowing demand from consumers.”

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Looking at the 10-year figures, the growth in mortgage lending among high-street banks has significant ground to cover if it is to get anywhere near the double-digit growth achieved in 2003 and 2004, despite the upward kick towards the end of 2012.

The BBA’s figures were matched by research conducted by national broker Mortgage Advice Bureau. Its mortgage index, which tracks national prices and lending, showed that, although activity was up 7.5 per cent from December 2011 to December 2012, remortgaging is still at a low point.

The data shows remortgage applications fell from 56 per cent in November to 53 per cent in December, significantly lower than 58 per cent at the start of 2012. 

However, Brian Murphy, head of lending for the firm, said lower five-year rates would help those with plenty of capital to invest, with average income put forward by borrowers in December reaching £38,745 – up 5 per cent on November’s figures.

The average purchase price dipped by 10.8 per cent from November to £203,824 in December.




December 2012 rate




Monthly payment




Cost over fixed term




Highest rate since June 2007




Monthly payment




Cost over fixed term




Fixed term saving at current rate





Adviser view

Andrew Montlake, director of London-based Coreco Group, said: “Lenders have certainly been talking a good game, with plans to bring more products to the market, enter into new areas and increase competition, even at higher LTVs. As rates reduce, remortgage activity will no doubt increase especially as those who took out mortgages within the last few years will now revert to higher variable rates.

“Although the expected growth in the buy-to-let market did not quite materialise last year, this is still a focus for lenders and we have started to see more and more landlords express an interest in expanding portfolios over the coming months.”