UK banking and financial services association BBA released its latest figures for British high street banks on Tuesday, which reveal that mortgage approvals decreased in May this year.
BBA’s data relates to the UK activity of 21 institutions across the banking groups of Barclays, HSBC Bank, Lloyds Banking Group, Royal Bank of Scotland Group, Santander UK and Virgin Money.
According to BBA, the fall in mortgage approval volumes this year could be a result of new UK mortgage rules and the introduction of the new application regime; however, this has apparently impacted more on re-mortgaging and other secured loans rather than house purchases. When compared to a year ago, mortgage approvals in May 2014 were up by 13% for house purchases, but down by 15% for remortgaging and 43% less for other secured loans.
Gross mortgage borrowing was shown to be 26% higher than in May last year, at GBP11.1bn. The overall mortgage stock is 1.0% higher than a year earlier and has been rising since the beginning of 2014 as a result of higher demand. This contrasts with much of 2013 when new monthly borrowing was more than offset by elevated capital repayment (in part reflecting homeowners switching lenders).
Excluding real estate, business borrowing is increasing and is only 0.3% below the level in the same period last year, with the rate improving from -6.1% in May 2013 to the current rate of -0.3%. Funding infrastructure in the energy sector also pushed up borrowing in May this year and there is said to be positive growth in manufacturing.
Over the past year, unsecured borrowing has increased by 1.2%, with card borrowing growing by 2.7%. Credit card spending amounted to GBP8.4bn on credit cards, 6.8% more than in May last year. Borrowing on personal loans and overdrafts was 0.1% lower; however, the demand for loans was higher, which reportedly continues to reflect rising consumer confidence and an improving economy. Following a long period of contraction, net borrowing on personal loans and overdrafts is starting to expand.
BBA’s figures show that ISA deposits have been much lower in this year’s ‘saving season’, with GBP5.3bn being deposited with high street banks during March to May compared with GBP9.0bn in the same period of 2013, although personal deposits are recorded as growing by 3.5% annually.