Annual Consumer Credit Growth Slowed in December

The Bank of England has reported that annual consumer credit growth slowed to 6.6% in December, reflecting the continuation of relatively weak flows of new lending.

The net monthly flow in December fell to £0.7 billion, reflecting less extra borrowing on credit cards.

UK businesses increased their borrowing through bank lending and commercial paper in December. But they made large net redemptions of bonds in for the second month in a row, contrasting with strong issuance earlier in the year.

Households significantly increased their deposits in interest-bearing instant access savings accounts in December, contributing to an increase in households’ money holdings.

Mortgage market activity has been broadly stable since 2016, and this trend has continued. Households borrowed £4.1 billion secured against property in December, slightly above the £3.9bn average of the previous six months and up from November’s figure of £3.6bn. The figure was anticipated to be in the region of £3.45bn.

Mortgage approvals for house purchase (an indicator of future lending) were around 63,800 in December - worth a combined £11.9bn - slightly down on November's 63,952 at £12bn, but slightly below their 2018 average of around 65,200.

Additional data shows 47,902 remortgages were approved, with a total valuation of £8.5bn were approved, down from respective figures of 48,558 and £8.7bn.

Total loan values for the month reached £21.1bn; lower than November's figure of £21.3bn and the previous six-month average of £21.7bn.

Managing Director of One77 Mortgages, Alastair McKee, commented:

“The latest mortgage lending figures haven’t just exceeded industry expectation, they’ve gone so far above and beyond them, they’re no longer visible with the naked eye.  

While many have been preparing to place the last nail in the coffin of the UK property market ahead of any EU resolution that may occur, a monumental surge of four billion mortgage approvals suggests that there’s not only life in the old dog yet, but it could well make it to Crufts this year.

Of course, it is early days, but this huge uplift in buyer demand could be just the shot in the arm we’ve been looking for and shows signs of promise for the year ahead.”

Source : Insight DIY

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