Mortgage lending up

May’s gross mortgage lending of £19.7bn was 8% more than in May 2006 new figures from the British Bankers Association have said.

Though the highest level of new business since November, partly reflecting strong re-mortgaging activity, it follows the usual yearly pattern of stronger lending going into the summer months.

There were 204,800 mortgages approved (for all purposes) in May; just 2% more than in May 2006, with an aggregate value of £24.2bn. The average loan approved for house purchase was £157,100, some 13% higher than a year earlier.

Underlying net mortgage lending (gross lending minus repayments and redemptions) rose by £5.8bn, well up both on April’s increase (£5.1bn) and the recent average of £5.4bn. The annual growth in net mortgage lending continued to stay around 14%.

When compared to May 2006, house purchase approvals were down 4% by number but up 9% by value; remortgaging approvals were up 13% by number and 25% by value; while approvals for equity withdrawal were down 3% by number but 6% higher by value.

David Dooks, BBA director of statistics, said: “Contrary to the recent stable trend, the banks gross and net mortgage lending strengthened in May, reflecting an improved competitive position, rather than a general rise in mortgage demand across the market. And, because of strong approvals in May, the banks’ higher market share is likely to continue over the next couple of months.”