31 August 2010

Lending rates for July 2010

For once the oft-used expression "mixed messages" seems the most apt way to describe the latest lending stats from the Bank of England.

Total net lending to individuals rose by £0.3 billion in July. The twelve-month growth rate was unchanged at 0.8% in July. The three-month annualised growth rate fell to 0.5% in July, from 0.6% in June.

Within the total, net lending secured on dwellings increased by £0.1 billion, below the June increase of £0.5 billion and the previous six-month average of £0.8 billion.

The twelve-month growth rate rose slightly in July to 1.0%, from 0.9% in June, and the three-month annualised growth rate decreased to 0.4%, from 0.6% in June.

The number of loan approvals for house purchase (48,722) was broadly in line with the June figure (48,562) and the previous six-month average (48,546). Approvals for remortgaging (26,951) however, were up on June and also higher than the previous six-month average (26,235).

This could suggest that home owners are cashing in on the equity of their homes to fund major improvements such as buying a new kitchen or bathroom. Equally, they could be using the money to pay off other loans.

Consumer credit rose by £0.2 billion in July, in line with the previous six‑month average and above the June decrease of £0.1 billion, and credit card lending increased by £0.2 billion, in line with the previous six-month average. Other loans and advances remained stable, also in line with the previous six-month average.

The annual growth rate of consumer credit rose by 0.2 percentage points to 0.2% and the three-month annualised growth rate rose to 0.9%.

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