The British Bankers’ Association (BBA), a UK association for the banking and financial services sector, released seasonally adjusted figures on Tuesday that indicate an improvement in the UK housing market.
According to the BBA, approvals for mortgages for house purchase were 24% higher in May 2013 compared to May 2012, with the average house purchase approval increasing to £159,200. Remortgaging also increased by 17% and there was a slight net rise overall in unsecured consumer borrowing.
The BBA data comes from the UK’s main high street banking groups (MBBG), which includes Barclays, HSBC Bank, Lloyds Banking Group, Royal Bank of Scotland Group, Santander UK and Virgin Money. These banking groups account for some two-thirds of all UK mortgage lending outstanding and provide around 50% of all consumer credit.
In addition to house purchases, the BBA said card borrowing appears to be on the rise, with new spending of £7.8bn on credit cards in May this year being slightly higher than the recent monthly average. This is said to be in line with an increase in retail sales volumes. The figures suggest that card borrowing is being used as an alternative method of financing, as a contraction in borrowing levels of personal loans and overdrafts has been recorded.
Business borrowing levels are still on the decline, the BBA figures showed, with net borrowing by non-financial businesses falling by £1.7bn and financial business borrowing down by £3.3bn.
David Dooks, BBA statistics director, commented: “SMEs use of their own high levels of cash resources and large companies’ use of alternative finance means demand for bank borrowing is subdued and a reflection of challenging trading conditions.”