Latest lending figures from the British Bankers Association (BBA) reveal a total increase in lending of £23bn, which is double the average rise over the last six months.
The net underlying rise in total sterling lending rose 23bn, or 2% to £1,191bn, which is also double last month’s increase of £11.4bn, while net mortgage lending saw an increase of £5.4bn, again higher than both the £4.7bn rise in February and the average rise of £4.9bn over the last six months.
However the BBA says unsecured personal lending fell by £0.4bn this month, compared with an average rise of £0.5bn in the last six months, as loans and overdrafts fell by more than £0.1bn, while credit card borrowing slipped by £0.2bn.
The figures reveal lending to non-financial companies has also been very strong, as lending to real estate companies rose by £0.7bn, while lending to wholesale and retail trade companies also rose by £0.7bn.
Other sectors benefiting from the strong lending figures are transport, storage and communication, hotels and restaurants and cold water supply, although the figures show there were net repayments by the manufacturing sector of £0.2bn. Meanwhile deposits from the private sector rose by £16bn, or 1.9% to £865bn, as personal deposits increased by £4.8bn.
The BBA says this strong rise reflected inflows into certain product types, such as cash ISAs, which offered attractive interest rates.
Meanwhile, the Building Societies Association (BSA) figures also reveal net increases in saving and lending, with building societies receiving net inflows of £384m, up from 221m in March 2005, while gross advances were £4,199m, up from £3,491m a year ago.
Its figures show net advances were £815m compared to £781m a year ago, while approvals had also increased to £5,643m, compared to £4,499m in March 2005. In addition, the BSA figures also show an increase in deposits in cash ISAs, with net receipts in March of £603m, compared to just £499m at the same time last year.
David Dooks, BBA director of statistics, says the contrast between stronger mortgage lending and net repayments of unsecured borrowing suggests individuals are optimistic about the housing market, though careful about card borrowing, overdrafts and personal loans.
He adds: “When deposit growth over recent months is also taken into account, the aggregate financial position of the personal sector as a whole does not appear to be under strain.”
And Adrian Coles, director-general of the BSA, says savings inflows into building societies remain strong, as the first quarter’s figure was over four times that of 2005, and the highest first quarter inflow since 2001.
He adds: “The slightly uncertain economic environment has seen many households turning to building societies for competitive products and a safe home for savings. It is also notable net inflows to ISAs were up by 20% in March compared to a year ago.”
On the mortgage side, he points out lending activity is well up on a year ago, suggesting building societies are taking a significant share as the market recovers relatively strongly this Spring. He adds of particular note is the high approvals figure for March which suggests a high level of spending as the Spring progresses.
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