Mortgage lending bounces back in August

Mortgage lending bounced back last month after falling into the negative for the first time on record in July, latest figures from the Bank of England (BoE) show.

Net lending, which does not take into account redemptions and repayments, rose by £0.7bn in August, the highest level since February.

The rise comes after homeowners repaid £203m more than was advanced during July.

But the 12-month growth rate continued to fall by 0.1% to 0.8%, and the three-month annualised growth rate remained at 0.2%.

Within total secured lending, secured lending by banks excluding the effects of securitisations, increased by £2.7bn, above the £2.3bn increase in July and in line with the six-month average of £2.6bn.

The number of house purchase approvals stood at 52,317, in line with the July figure and above the previous six-month average.

But both remortgaging approvals and loans approved for other purposes fell. Remortgaging approvals dropped to 29,059 from July's figure of 33,880 and loans approved for other purposes totalled 26,256.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (RICS), says it is reassuring the negative reading recorded in July proved to be a one off.

"Mortgage demand is continuing to grow relatively strongly," he says. "However, it is not just the scarcity of mortgage finance which is making it difficult to satisfy this demand.

"The lack of appropriate properties on the market is compounding the problem by leaving prospective buyers with little real choice in some parts of the country."