Equity withdrawal loans and the numbers of loans approved for remortgaging have increased in the pas...
Equity withdrawal loans and the numbers of loans approved for remortgaging have increased in the past year despite figures showing the rise in personal lending is starting to slow.
Figures from BBA released today show that almost 16% more people opted for an equity withdrawal loan in May compared to the same month last year.
This comes despite last week's MBBG lending figures revealing that personal lending is still growing but the rise is slower than in recent months.
According to BBA, gross mortgage lending for May was £14.7bn, an increase of almost 10% increase compared to May 2002.
In the lead is remortgaging activity, that has become increasingly popular with almost 10% more people opting for a remortgage compared to a year ago.
But in sharp contrast to this, there were a 24% drop in loans approved for house purchase and the total numbers of mortgage loans approved in May dropped with 4% compared to April.
At the same time, the average house purchase loan value increased to £94,100 - a 6% rise compared to a year ago.
BBA director of statistics David Dooks says:
"As well as the substitution of secured borrowing for unsecured finance, the effect of borrowers switching between alternative forms of consumer credit means that focussing on one particular aspect can be a misleading guide to overall personal sector debt."
"The strength of gross mortgage lending can also be misinterpreted. Remortgaging inflates the gross figures but, if it occurs between the major banks, it has no effect on their aggregate net lending figures."
"The banks' weaker rise in May's net lending is therefore a reflection of lower housing activity or the competitiveness of the marketplace. With approvals of loans for house purchase 20% lower than in May last year, this picture seems likely to continue in the short term. The overall picture in May was therefore one of moderating demand from consumers," he says.
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