- 01
- Feb
Mortgage lending in Britain rose significantly in 2006, fed by a strong housing market, lower interest rates, and movements by banks to make it easier for UK consumers to buy their first home. However, growth in personal loan borrowing has slowed.
The British Bankers’ Association (BBA) revealed today that mortgage lending rose by £66.8 billion in 2006. This is a 20 per cent increase over 2005′s data.
The increase of £4.2 billion in personal loans and bank overdrafts is a 15 per cent decrease over 2005. BBA director of statistics David Dooks states that 2006 was a year of “contrasting trends” for secured and unsecured personal lending.
He said: “While mortgage demand remained robust, despite the housing market experiencing seven per cent annual price inflation and an expectation of rising interest rates throughout the second half of the year, the appetite for consumer credit clearly waned, as reflected by the significant contraction in credit card borrowing.”
Individual figures for December show that homeowner loan lending rose by £5.8 billion. November was a record breaking year with £6.7 billion in homeowner loan lending.
The BBA also revealed the amount of money borrowed on credit cards in the final month of 2006 fell by £0.3 billion
The decrease in personal loan borrowing, secured and unsecured loans represented, does not necessarily reflect a downward trend. Secured loan borrowing was on a rise, while unsecured lending saw a dramatic drop in 2006.
This imbalance, combined with the number of consumers who were saving for a homeowner loan, means that it may be several months before analysts can define an industry trend, if there is one.
