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LONDON (MNI) – UK mortgage lending remained in the doldrums through
August, with approvals 13% below their year ago levels, even while they
showed a slight uptick from levels seen in July, according to BBA data
released today.

BBA statistics director, David Dooks said:

“People are acting conservatively in this weak economic
environment, maintaining debt repayments and building up deposits…
Household mortgage approvals are improving slightly but unsecured
borrowing continues to be subdued.”

Corporate borrowing also remained subdued, the BBA said.

“Weak trading conditions persist so companies may well remain
reluctant to borrow for investment or expansion in these conditions,”
they said.

Net mortgage lending grew by just 0.6% in the year to August, the
BBA said while the outstanding amount of unsecured borrowing actually
fell by 3.1% in the year to August.

The BBA highlighted the shift in net lending in recent years as
gross lending has fallen and homeowners seek to pay down capital while
interest rates remain so low.

“Gross mortgage lending of stg6.9bn in August was below the recent
monthly average and reflected continued low levels of activity in the
housing market. Historically, the difference between gross lending and
capital repayment produced significant net lending each month. However,
with declining levels of gross lending and high capital repayments,
resulting from low interest rates, net lending has reduced”.

While the Bank of England and UK Treasury’s flagship ‘Funding for
Lending’ Scheme started at the beginning of August, officials have
cautioned that it will be some while before its impact on credit
conditions can be assessed.

The BOE will release its Q3 Credit Conditions survey on Wednesday,
which will provide some insight into the availability of credit for
firms.

–London Bureau; Tel: +442076341624; email: drobinson@marketnews.com

[TOPICS: MABDS$,M$B$$$,MT$$$$]