BSA, BBA numbers underline CML, BoE, ONS messages

Lending figures published by the Building Societies Association and the British Bankers’ Association have strengthened the case for hawks at the Monetary Policy Committee.

Another monthly rise recorded for December helped the BSA’s members record their biggest ever year, with building society gross mortgage lending hitting £52.8bn. In December alone gross advances hit £3.97bn, up from £3.61bn in the same month one year earlier. Approvals were up at £3.96bn compared to £3.15bn.

And, while noting net lending continued to drop, the association says December’s strong figures suggest lending will remain “robust” through the start of 2007.

Adrian Coles, director general said: “It is likely that the impact of interest rate rises will continue to feed through, dampening demand. However, we predict building societies will still have a successful 2007."

The BBA also suggests net lending was down in December, but in the area of mortgages remained in line with the average for the preceding six-month period. Net mortgage lending in the month rose £5.8bn, its figures suggest, down from £6.7bn in November.

Total net mortgage lending through 2006 rose by £66.8bn, up 20% on 2005. However, loans and overdrafts increased less fast than in 2005 at £4.2bn – a rate of increase down 15% on the year before – and credit card lending actually contracted by £1.8bn against an increase of £1.6bn in 2005.

Private sector deposits gained by £13.3bn, or 1.4%, to £944bn, the BBA says.

Citizens Advice, responding to the BBA’s figures, says the noted decrease in credit card debt does by no means suggest a fall in the demand for its services by struggling consumers.

“Housing debt, including problems with mortgage, secured loans and rent arrears, was one of the fastest growing problem areas, up by 20% on the previous year,” CA said in its statement.

“Of the 127,000 housing debt problems brought to Citizens Advice Bureaux nearly 10,000 concerned threatened repossession and 2,000 concerned actual repossession or eviction. These figures bear out the findings of an NOP survey for Citizens Advice published in September showing that some 770,000 people had missed at least one mortgage payment in the previous twelve months”

The BSA and BBA’s figures come on the heels of the CML suggesting yesterday gross mortgage lending in December hit a new record. The Council sees the market remaining strong because of a still strong economy and subsequent demand for property.

RICS, the Royal Institute of Chartered Surveyors, said earlier this week it saw increased risk of a rapid market contraction following the latest interst rate moves by the Bank of England.

The Office for National Statistics published figures this week suggesting inflation as measured by both the Consumer Price Index and the Retail Price Index are running higher annualised rates than seen for a decade.

If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Jonathan Boyd on 020 7484 9769 or email jonathan.boyd@incisivemedia.com.