Record leap in mortgage lending

MORTGAGE lending by UK banks leapt by £6.4bn in April, new figures reveal. The British Bankers Association said the rise from £5.95bn in March was the highest ever monthly increase.

New lending to individuals, which includes mortgages, rose from £7.36bn to £7.39bn. Growth in unsecured personal lending, up £1bn, was weaker than the previous month, with stronger card borrowing countered by subdued demand for personal loans, after strong growth in March.

BBA director of statistics David Dooks said: 'Mortgage demand continues to be a significant component of the bank lending.'

Fresh figures form the Council of Mortgage Lenders backed up the trend. It revealed mortgage lending in April had soared to £25bn, up 1% on March and 25% higher than a year earlier.

There were also signs that young buyers continue to be priced out of the market. Loans to first-time buyers slipped back to 28% of all loans for house purchase, down from 31% the previous month and 34% last April. But the number of first-time buyers held up at around 33,000.

The CML also said buyers, fearing a rate rise, were increasingly opting for more secure fixed rate deals. Such deals accounted for 30% of new lending, up from 25% in March.

It pointed out, however, that most borrowers were happy to take the gamble of a slow rise in rates.

'With an average fixed rate of 4.99% compared with an average 4.74% for variable rates, borrowers continue to show how price-sensitive they are,' a spokesman said. 'In an environment where interest rates are likely to rise further, greater numbers of borrowers might be expected to be attracted to the certainty offered by fixed rates — yet it appears that the price differential is stifling the appetite for fixing.