Resilient mortgages & no Christmas cards1

Following last week’s release of MBBG net lending figures for December, further information now available on lending to individuals shows that:

• December's gross mortgage lending was £18.1bn, 7% more than the £16.9bn in December 2005. In line with seasonal patterns, this total was well down on November’s record of £21.4bn.
• There were 123,518 mortgage approvals (for all purposes) in December, with an aggregate value of £13.4bn.  The average loan approved for house purchase was £146,400, some 9% higher than a year earlier.
• Underlying net mortgage lending (gross lending minus repayments and redemptions) rose by £5.8bn, in line with the recent average, compared with November's record increase of £6.7bn.  The outstanding level of mortgage lending grew by around 14% in 2006.
• Credit card borrowing fell by £0.3bn in the month and over the year overall consumer credit grew by only 2%.

David Dooks, BBA director of statistics, said:

"The final quarter of last year, despite seasonally lower activity in December, showed the mortgage market to be stronger than at the same time a year earlier and lending still growing significantly at a time of rising interest rates.

The annual growth in consumer credit, at only 2%, is low by historical comparison and, although strong Christmas sales have been reported, our December figures suggest that spending was not fuelled by more borrowing on credit cards."

Mortgage Lending

• The 2006 annual volume of loans approved for house purchase (832,000) was 11% higher than in 2005 and their value (£115.9bn) was 20% higher. Approvals for remortgaging in the year (773,000) were 1% lower than in 2005 but their value (£94.6bn) was 11% higher.  Loans approved in the year for equity withdrawal (580,000) were 7% lower and their value (£15.8bn) was 1% lower.
• Following strong volumes in November, loan approvals In December were much lower, in line with seasonal expectations.  When compared to December 2005, house purchase approvals were down 11% by number and 3% by value. Remortgaging approvals were down 20% by number and 10% by value; whilst approvals for equity withdrawal were 2% lower by number but 4% higher by value.

Consumer Credit

• New borrowing on credit cards totalled £7,569mn in December; 2% lower than December 2005.  After seasonal adjustment, net lending decreased by £263mn.   Total new borrowing in 2006 (£86.6bn) was 3% lower than in 2005.
• New lending on personal loans and overdrafts in December was lower than in November and after seasonal adjustment, net lending rose by £400mn compared with a recent monthly average of +£276mn. 

For further information, please contact:
Brian Capon, Head of media relations (020 7216 8810 brian.capon@bba.org.uk )
David Dooks, Director of Statistics (020 7216 8837 david.dooks@bba.org.uk )

Notes to Editors

0. The Major British Banking Groups (MBBG) account for some two-thirds of all mortgage lending outstanding and around 70% of gross lending.  Additionally, they provide over half of all consumer credit outstanding and, within that, some 70% of all card credit. They include twelve of the fifteen largest mortgage lenders in the UK: Abbey, Alliance & Leicester, Barclays and Woolwich, Bradford & Bingley, HBOS (through Halifax and Bank of Scotland), HSBC Bank, LloydsTSB (through Cheltenham & Gloucester), Northern Rock, Royal Bank of Scotland and National Westminster.
0. Statistical releases relating to the business of the MBBG are available on the internet in the 'News Room' area of the BBA website.
0. Figures shown for net changes in amounts outstanding are consistent with Table A4.3 of the Bank of England’s Monetary & Financial Statistics, which shows lending to individuals by banks and building societies excluding the effects of securitisations and loan transfers. However from January 2005 the series are also adjusted to remove fluctuations arising from regular intra-group transactions between banks and their non-bank subsidiaries, thus providing a better indication of underlying trends in mortgage lending. This has resulted in a restatement of series published previously. Other figures are consistent with the comprehensive data for lending to individuals by all lenders due to be released by the Bank of England on 30 January 2007.