Mortgage lending in UK falls to 12-month low

Mortgage lending in the UK slowed to its lowest level for a year during August, as consumers spent a record amount on their credit cards, figures showed today.

The Bank of England reported a fall in total lending for the second month in a row, suggesting consumers were finally becoming wary about taking on more mortgage debt.

But, at the same time, credit card spending reached a new high of £12.36bn (€18.1bn), although after strong repayments were taken into account the increase in outstanding plastic debt was only the fourth highest on record.

Total mortgage advances during the month reached £25.14bn (€36.9bn), while net lending, which strips out repayments, eased to £8.38bn (€12.3bn) – the lowest figure since August 2003.

Mortgage lending looks set to remain subdued going forward, with the number of loans approved for house purchase falling to 96,000 in August, a level last seen in October 2000.

The value of all loans approved was also down for the fourth month in a row at £23.57bn (€34.6bn), £1.5bn (€2.2bn) less than the average over the previous three months.

The figures are in line with statistics reported by the Council of Mortgage Lenders and British Bankers’ Association earlier in the month, both of which showed mortgage lending had slowed.